Section 263 limitation runs from the original assessment order when the revised issue was not covered in reassessment.

Where a reassessment is initiated on reasons unrelated to the issue later sought to be revised, the limitation for section 263 is computed from the original assessment order, not the reassessment order. The reassessment here did not address the section 14A read with Rule 8D disallowance that formed the basis of revision, so the earlier assessment remained the relevant starting point under section 263(2). As the revisionary action was initiated more than two years after that original order, it was barred by limitation and could not be sustained.

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Issues: Whether the period of limitation for invoking revisional jurisdiction under section 263 of the Income-tax Act, 1961, runs from the original assessment order or from the reassessment order when the issues in revision are distinct from the reasons recorded for reopening.

Analysis: The reassessment was initiated on reasons pertaining to a different assessment year and did not cover the disallowance under section 14A read with Rule 8D that formed the basis of the revisionary action. The settled principle applied was that where the issue sought to be revised was not the subject-matter of reassessment, the earlier assessment order continues to be the relevant starting point for limitation under section 263(2). Since the revision was initiated more than two years after the original assessment order, the revisional exercise was beyond the prescribed period and could not be sustained.

Conclusion: The limitation for section 263 had to be reckoned from the original assessment order, and the revisionary order was barred by limitation and invalid.

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