Attribution of offshore receipts to Indian permanent establishment overturned after ITAT set aside the revisional direction; subsequent assessment invalid.

Revision concerned attribution of part of offshore receipts to the taxpayer's permanent establishment in India; the Commissioner treated 25% of income as PE-attributable, and the Assessing Officer issued a consequential assessment. The taxpayer successfully overturned the revisional order before the ITAT, which set aside the Commissioner's order; the Revenue's further appeal was dismissed. Because the revisional order was quashed on appeal, the subsequent assessment purportedly giving effect to that revisional direction could not be sustained and is without operative effect.

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Issues: Whether any substantial question of law arises in the Revenue's appeal under Section 260A challenging the ITAT's order which set aside a Section 263 revisionary order, where the impugned ITAT decision was founded solely on the fact that the Assessing Officer's order was given to give effect to a Section 263 order already set aside.

Analysis: The impugned appeal under Section 260A was limited to the ITAT's reasoning that the Assessing Officer had passed an order merely to give effect to a Section 263 order which had been set aside. The substantive questions projected by the Revenue concerned the merits of the Section 263 revisionary exercise and related factual or legal contentions that are the subject matter of a separate proceeding. Because the ITAT's decision did not adjudicate those merits but rested on the prior setting aside of the Section 263 order, no distinct substantial question of law arises for determination in the present appeal under Section 260A.

Conclusion: No substantial question of law arises; the appeal is dismissed in favour of the assessee.

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