TaxTMI 
TaxTMI 
1981 (2) TMI 12
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.... that the Commissioner of Income-tax had the power to revise the order of the ITO on the particular issue in question as the same was not the subject-matter of decision by the AAC in the appeal filed by the assessee ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the CIT was competent to Pass the order under section 263 of the Income-tax Act, 1961, even though the assessee's appeal against the order of the ITO was already disposed of by the AAC and the ITO's order stood merged with the AAC's order? (3) Whether, in view of the facts and circumstances of the case, the order passed under section 263 of the Income-tax Act, 1961, is sustainable ? (4) Whether, having regard to ....
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....under s. 10 of the Act. The Commissioner revised the order of assessment under s. 263 of the Act, because he was of the opinion that the order passed by the ITO was erroneous in so far as it was prejudicial to the interest of the Revenue. The Commissioner after hearing the assessee set aside the order of the ITO and held that the rental income of the palace for the entire previous year was liable to tax. He accordingly directed the ITO to pass a fresh assessment order in accordance with law. Aggrieved by the order of the Commissioner, the assessee preferred an appeal before the Tribunal. The Tribunal has affirmed the order of the Commissioner and has dismissed the appeal. At the instance of the assessee, the Tribunal has referred the afores....
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.... of the appellate authority and, therefore, the Commissioner was competent to initiate proceedings under s. 263 of the Act. The facts of the present case are also similar. In the present case the order of the ITO holding that the rent of the palace prior to December 28, 1971, was not liable to tax, was not the subject-matter of appeal before the AAC and was also not considered by him. In the circumstances following our decision in the two cases referred to above our answers to questions Nos. (1) and (2), referred to us, are in the affirmative and against the assessee. Now, as regards the merits of the case, the ITO taxed the income of the palace which accrued to the assessee after December 28, 1971, on the ground that cl. (19A) of s. 10 ....
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....he commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of the provisions of the Merged States (Taxation Concessions) Order, 1949, or the Part B States (Taxation Concessions) Order, 1950, or, as the case may be, the Jammu and Kashmir (Taxation Concessions) Order, 1958. " The said Act although came into force on September 11, 1972, provided that cl. (19A) in s. 10 of the Act shall be deemed to have been inserted with effect from December 28, 1971. Thus, although the said cl. (19A) was in force on April 1, 1972, but by that clause the exemption granted to erstwhile rulers in respect of the annual value of the palaces was withdrawn and the annual value of only one of the palaces in the occupation of the ruler was e....