Revision under section 263 barred where treaty exemption claim was examined and a plausible grandfathered view was taken.

The Assessing Officer made detailed enquiries into the assessee's treaty exemption claim on long-term capital gains from shares acquired before 1 April 2017, including the tax residency certificate, share purchase documents, valuation report, and transaction particulars, and accepted the claim on the basis of grandfathered protection under the India-Mauritius tax treaty and CBDT clarification. As the assessment order was passed after enquiry and reflected a plausible legal view, the revisionary authority could not invoke section 263 merely because further enquiry was considered desirable. The revisionary order was therefore unsustainable and was set aside.

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Issues: Whether the revisionary order under section 263 was sustainable when the Assessing Officer had enquired into the assessee's claim of treaty exemption on long-term capital gains arising from sale of shares acquired before 1 April 2017.

Analysis: The assessment record showed that the Assessing Officer had issued detailed queries on the capital-gain computation, the treaty claim, the tax residency certificate, the acquisition and sale of shares, the share purchase agreement, the buyer's details, and the valuation report. The assessee replied with the relevant incorporation documents, tax residency certificate, shareholding and transaction particulars, and explained that the shares had been acquired in 2007-08, well before the protocol amendments to Article 13 of the India-Mauritius tax treaty took effect. The treaty amendment and CBDT's contemporaneous clarification grandfathered investments made before 1 April 2017. On these facts, the assessment order reflected a permissible view taken after enquiry, and the revisionary authority did not identify any specific enquiry that was demonstrably absent.

Conclusion: The revision under section 263 was not justified and was set aside.

Ratio Decidendi: Where the Assessing Officer has conducted enquiry on the relevant treaty claim and adopts a legally sustainable view on grandfathered treaty protection for pre-1 April 2017 share acquisitions, the assessment order cannot be revised merely because the revisional authority considers further enquiry desirable.

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