TaxTMI 
TaxTMI 
2006 (6) TMI 106
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....n the following substantial question of law: "Whether the Income-tax Appellate Tribunal was justified in upholding the order passed by the Commissioner of Income-tax in its revisional jurisdiction under section 263 of the Income-tax Act which had resulted in revising the assessment order dated August 28, 1998, which, according to the assessee, had merged into an order passed by the Commissioner of Income-tax (Appeals) on April 28, 1999?" 2. The facts relevant for the disposal of appeal which lie in a narrow compass need mention infra. 3. The assessee (appellant) is a limited company. It is engaged in the business of what is called "hatching eggs" by scientific methods. The assessee for the assessment year 1996-97 filed a return of ....
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....of the Act against the assessee. According to the Commissioner, the Assessing Officer committed an error of law in granting benefit of deduction claimed by the assessee under sections 80HHA and 80-I. In the opinion of the Commissioner, since the assessee was not engaged in any industrial activity as held by the Supreme Court in the case of CIT v. Venkateswara Hatcheries P. Ltd. [1999] 237 ITR 174 and hence, no benefit of these two sections (section 80HHA /section 80-I) was available to the assessee treating themselves to be an industrial undertaking. The Commissioner was, therefore, of the view that the order passed by the Assessing Officer in so far as it relates to granting the benefit to the assessee under section 80HHA and section 80-I ....
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....risdiction to invoke suo motu revisionary powers under section 263 ibid. In other words, the submission was that the proceedings under section 263 can be initiated by the Commissioner against the assessee only in respect of those issues decided by the Assessing Officer in his order which were not the subject-matter of appeal at the instance of the assessee but when the assessee carried the matter in appeal to the Commissioner of Income-tax (Appeals) a the Commissioner of Income-tax (Appeals) dealt with those issues, the principle of merger comes into by resulting in denuding the power of the Commissioner to invoke the revisionary powers under section 263 ibid against the assessee. Learned counsel maintained that it was for the Commissioner ....
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....ssees who are engaged in this business are not eligible to claim any benefit available to the assessee under sections 80HHA and 80-I. In other words, the benefit of these two sections is available only to an industrial undertaking and since "hatching of eggs" was not regarded as an industrial undertaking within the meaning of these two sections and, hence, any assessee who was engaged in the business of "hatching of eggs" was not held carrying on any industrial activity so as to claim the benefit of deductions available under section 80HHA/80-I of the Act. True it is that law on this issue was not settled on the date when the Assessing Officer passed an order because the decision of the Supreme Court was rendered subsequent to the order of ....
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....atisfy the attributes of the industrial activity for the purpose of claiming deductions under section 80HHA/80-I. In such circumstances, the Assessing Officer was not justified in granting such benefit. In our humble view, it could be set aside only by the order of the Commissioner by taking recourse to the provisions of section 263 ibid. 11. We do not agree with the submission urged by learned counsel for the appellant when he contended that since the order of the Assessing Officer, dated August 28, 1998, was the subject-matter of appeal before the Commissioner of Income-tax (Appeals) and, hence, it merged in the appellate order, dated April 28, 1999. In our humble view, there lies a fallacy in this submission. In the first place, it wa....