Subhash Chander Kathuria, V. DCIT, Circle-25(1),

ITA 1747/DEL/2006

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3992 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-04-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 18-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR; H L DIHANA
• Assessee Lawyers: ASHWANI TANEJA; DR RAKESH GUPTA
• Keywords: Business income; Depreciation
• Section: 143(3); 80HHC; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 1747/DEL/06 ASSTT. YR: 2001-02 SUBHASH CHANDER KATHURIA VS. DCIT CIR. 25(1), 55-B, RAMA ROAD, NEW DELHI. INDUSTRIAL AREA, NEW DELHI. PAN NO. AAJPK0171B (APPELLANT ) (RESPONDENT) APPELLANT BY: DR. RAKESH GUPTA ADV. & SH. ASHWANI T ANEJA FCA RESPONDENT BY: SHRI H.L. DIHANA CIT(DR) & MS. Y. KA KKAR SR. DR O R D E R PER R.P. TOLANI, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 17.03.2006 (WRONGLY MENTIONED AS 17.03.2004 IN THE ORDER) PASSED BY COMMISSIONER OF INCOME TAX (CIT), DELHI-IX, NEW DEL HI, U/S 263. 2. FOLLOWING GROUNDS OF APPEALS ARE RAISED:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX, GROSSL Y ERRED ON ERRONEOUS AND INSUFFICIENT GROUNDS, IN RE-OPENIN G THE ASSESSMENT OF THE ASSESSEE U/S 263 OF THE ACT TERMI NG IT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON THE GROUNDS THAT THE TURNOVER AND PROFIT OF SEPARATE AN D DISTINCT BUSINESS CARRIED ON BY THE ASSESSEE ARE LIABLE TO B E CLUBBED TO FORM THE TOTAL TURNOVER AND PROFITS OF THE BUSINESS RESPECTIVELY FOR CALCULATING THE DEDUCTION UNDER SECTION 80HHC O F THE ACT AND THUS RESTRICTING THE CLAIM UNDER SECTION 80HHC OF THE ACT TO A SUM OF RS. 1,22,83,280/- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E IN LAW, HE LEARNED COMMISSIONER OF INCOME TAX, WHILE REOPEN ING THE ASSESSMENT, ERRED IN NOT APPRECIATING THE FACT AND THE LAW THAT THE VIEW TAKEN BY THE LD. AO WAS SUSTAINABLE IN LAW , THE HIGH COURTS OF KERALA AND MADRAS HAD DIVERSE VIEWS ON TH E SAME ISSUE AND THAT AT THE TIME OF FRAMING THE ASSESSMEN T ON 15.03.2004, BOTH THE JUDGMENTS OF THE RESPECTIVE HI GH COURTS INCLUDING THAT OF THE DELHI ITAT, SPECIAL BENCH, HA D BEEN PRONOUNCED, THEREFORE, THE ORDER PASSED WAS AFTER D UE APPLICATION OF MIND BY THE LD. AO AND WELL KEEPING IN VIEW THE LAW OF THE LAND EXISTING AT THE TIME OF FRAMING THE ASSESSMENT AND THEREFORE ALSO, THE ORDER PASSED WAS NOT ERRONE OUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WITHOU T PREJUDICE TO THE ABOVE, THE GROUNDS OF APPEAL ON MERITS ARE AS U NDER:- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX, ERRED ON ERRONEOUS AND INSUFFICIENT GROUNDS, IN CALCULATING THE DEDUCTION U/S 80HHC OF THE INCOME TAX ACT, 1961, AVAILABLE TO THE ASSESSEE AT RS. 1,22,83,280/- AS AGAINST RS. 2,17,7 6,592/- CLAIMED BY THE ASSESSEE AND RS. 2,13,25,983/- ALLOW ED BY THE LD. A.O. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX, ERRED ON ERRONEOUS AND INSUFFICIENT GROUNDS, IN ADDING THE T URNOVER AND PROFITS OF BOTH THE DISTINCT AND SEPARATE BUSINESS FOR THE PURPOSE OF CALCULATING THE DEDUCTION U/S 80HHC OF THE INCOM E TAX ACT, 1961. THE LD. COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THE FACT THAT THE ASSESSEES BUSINESS BE ING CARRIED ON WAS IN DIFFERENT PROPRIETORSHIP CONCERNS, THE BOOKS OF ACCOUNT AND BANK ACCOUNT WERE SEPARATELY MAINTAINED, THE GO ODS DEALT BEING DIFFERENT, SUBJECT TO DIFFERENT RISKS AND RET URNS AND THAT TURNOVER AND PROFITS OF BOTH SEPARATE AND DISTINCT BUSINESS WAS NOT LIABLE TO BE CLUBBED AS PER LAW 3. BRIEF FACTS ARE ORIGINAL ASSESSMENT IN THIS CAS E WAS FRAMED U/S 143(3) VIDE ORDER DATED 15.03.2004, DEDUCTION OF RS. 2,17 ,76,592/- AS CLAIMED BY ASSESSEE U/S 80HHC WAS RESTRICTED TO A SUM OF RS.2, 13,25,983/-. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT ASSESSING OFFI CER TOOK INTO ACCOUNT THE INCOME / LOSS FROM ALL PROPRIETORSHIP CONCERNS OF T HE APPELLANT NAMELY M/S. ANITA INTERNATIONAL, M/S ANITA INTERNATIONAL (EXPOR T DIVISION), M/S KATHURIA STEELS ROLLING MILLS, WHICH IS EVIDENT FROM THE COM PUTATION REPRODUCED AT PAGE 1 & 2 OF THE ORDER. 3.1. M/S ANITA INTERNATIONAL (EXPORT DIVISION) DEAL S WITH ONLY THE TRADING BUSINESS OF EXPORT OF GOODS. THIS EXPORT TRADING AC TIVITY IS NOT CARRIED ON BY ANY OTHER UNIT. ASSESSEE MAINTAINS COMPLETELY SEPAR ATE BOOKS OF ACCOUNTS FOR THIS EXPORT TRADING WHICH ARE SEPARATELY AUDITE D INCLUDING ITS P&L A/C. 3.2 ASSESSEE FILED AUDITORS CERTIFICATE CALCULATI NG DEDUCTION U/S 80HHC QUA THIS EXPORT TRADING AT A SUM OF RS. 2,17,76,592 /- WHICH WAS BASED ON THE AMOUNT OF TOTAL TURNOVER OF THE EXPORT BUSINESS AS PER SEPARATE BOOKS. AO HOWEVER REDUCED THE CLAIM U/S 80-HHC BY A PROPER WO RKING, WHICH IS MENTIONED THEREIN. 3.3 AGGRIEVED AGAINST THE ORDER OF AO, ASSESSEE PR EFERRED FIRST APPEAL INCLUDING THE ISSUE OF REDUCTION OF DEDUCTION U/S 8 0 HHC, CIT(A) VIDE ORDER DATED 6-12-2004 CONFIRMED THE ORDER OF AO ON THIS I SSUE. 3.4. CIT, THEREAFTER ISSUED NOTICE UNDER SEC 263 CL AIMING THAT AOS ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST ON RE VENUE INASMUCH AS THE TOTAL TURNOVER OF ALL UNITS WAS NOT AGGREGATED. ASS ESSEE OBJECTED TO THE SAME BY WAY OF WRITTEN SUBMISSIONS DATED 10-1-2006. CIT HOWEVER PASSED THE IMPUGNED ORDER U/S 263 HOLDING THAT THE TURNOVER OF ALL THE BUSINESS ENTITIES OF THE APPELLANT WERE TO BE AGGREGATED AS TOTAL TU RNOVER FOR COMPUTATION OF DEDUCTION U/S 80HHC IRRESPECTIVE OF THE FACT THAT APPELLANT HAD MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR HIS EXPORT BUSINESS. ACCORDING TO THE CIT, THE CLAIM U/S 80 HHC WAS ERRONEOUSLY ALLOWED BY THE ASS ESSING OFFICER. CIT AGGREGATED THE TURNOVER OF ALL THE UNITS TO ARRIVE AT TOTAL TURNOVER FOR CALCULATING DEDUCTION U/S 80HHC. CIT BY THIS ORDER U/S 263 HELD THAT THE DEDUCTION U/S 80HHC WAS TO BE ALLOWED AT RS. 1,22,8 3,280/- AGAINST SUM OF RS. 2,13,25,983/- ALLOWED IN THE ASSESSMENT ORDER. AGGRIEVED THE ASSESSEE IN APPEAL. 4. LD COUNSEL FOR THE ASSESSEE HAS FILED A BRIEF S YNOPSIS AND CASE LAW COMPILATION. IT IS PLEADED THAT THE VERY ASSUMPTION OF JURISDICTION BY CIT U/S 263 HHC WAS BAD IN LAW ON ACCOUNT OF THE FOLLOWING REASONS:- I. THE CLAIM OF DEDUCTION U/S 80HHC WAS SUBJECT MATTER OF REGULAR ASSESSMENT, THERE IS ENOUGH MATERIAL ON RECORD THAT WHILE ALLOWING DEDUCTION THERE WAS DUE APPLICATION OF MIND BY THE ASSESSING OFFICER AND HE HAS ADOPTED ONE OF THE POSSIBLE VIEWS WHICH WAS SUPPORTED BY HONBLE MADRAS HIGH COURT IN THE CASES OF - CIT VS. MADRAS MOTORS LTD. (2002) 257 ITR 60 (MAD), HOLDING AS UNDER: THAT THE TURNOVER FROM THE BUSINESS OF SALE OF MOTORCYCLES, MOTOR-CYCLE SPARE PARTS AND TELEVISION SETS COULD NOT BE INCLUDED IN THE TOTAL TURNOVER OF THE ASSESSEE FOR THE PURPOSES OF THE COMPUTATION OF SPECIAL DEDU CTION UNDER SECTION 80HHC. THE TRIBUNAL WAS RIGHT IN HOLD ING THAT THE TOTAL TURNOVER IN SECTION 80HHC WAS ONLY T HE TURNOVER RELATING TO EXPORT BUSINESS OF THE ASSESS EE AND NOT THE TURNOVER RELATING TO OTHER BUSINESS OF THE ASSESSEE. CIT V. SUDARSHAN CHEMICALS INDUSTRIES LTD. (2000) 2 45 ITR 769 (BOM) FOLLOWED. CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT (1978) 113 ITR 84 (SC) AND CIT V. STERLING FOODS (1999) 237 ITR 579 (SC) REFERRED TO. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED IN SHIVA DI STILLERIES 293 ITR 108. IN VIEW OF HONBLE SUPREME COURT DECISION IN THE CA SE OF MALABAR INDUSTRIES 243 ITR 83, AO HAVING A FRAMED SUCH ASSE SSMENT ADOPTING ONE OF THE POSSIBLE VIEW CAN NOT BE TERMED ERRONEOU S OR PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE SUCH ORDER CAN N OT BE REVISED U/S 263. II. CIT WHILE INVOKING SEC. 263 HAS REFERRED TO HONBLE KERALA HIGH COURT JUDGMENT IN THE CASE OF PARRY AGRO INDUSTRIES 257 ITR 41, WHICH IS ON ANOTHER LEGAL VIEW OF THE SAME ISSUE, C ONTRARY TO VIEW ADOPTED BY AO. III. AT THE MOST CITS VIEW GIVES RISE TO A DEBATE BEI NG POSSIBLE ON THE ISSUE ABOUT TOTAL TURNOVER I.E. THE AGGREGATE TUR NOVER OF ALL THE BUSINESS UNITS OR TOTAL TURNOVER OF THE EXPORT BU SINESS ONLY WHEN UNDISPUTEDLY SEPARATE BOOKS OF ACCOUNT FOR SUCH EXP ORT BUSINESS HAVE BEEN MAINTAINED AND IT IS NOT CARRIED ON BY ANY OTH ER ENTITIES. THE ISSUE BEING DEBATABLE, IT WAS NOT AMENABLE TO BE RE VISED U/S 263 AS PER HONBLE SUPREME COURT DECISION IN THE CASE OF MAX I NDIA 295 ITR 282. IV. THAT THE ASSESSMENT ORDER HAD MERGED INTO THE ORDER OF CIT(A) AS IN FIRST APPEAL THE GROUNDS ABOUT DEDUCTION U/S 80HHC WAS ADJUDICATED AGAINST ASSESSEE BY CIT(A) AND THEREFORE, ON ACCOUN T OF MERGER OF THIS ORDER IN THE ORDER OF CIT(A), REVISION COULD NOT BE DONE BY CIT U/S 263 DUE TO EXPRESS BAR CONTAINED IN EXPLANATION (C) TO SECTION 263(1) AND IN VIEW OF CATENA OF JUDGMENTS ON THIS ASPECT. 4.1 LD COUNSEL CONTENDS THAT HONBLE MADRAS HIGH COURT IN THE CASES OF MADRAS MOTORS LTD. & SHIVA DISTILLERIES (SUPRA) HAV E TAKEN A VIEW THAT IF SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED AND SAME EXPORT IS NOT CARRIED BY OTHER UNIT, TOTAL TURNOVER OF SUCH SEPARATELY KEPT BOOKS OF ACCOUNTS ALONE IS TO BE TAKEN TURNOVER FOR CALCULATING DEDUCTION U/S 80HHC. HONBLE KERALA HIGH COURT IN PARRY AGRO INDS LTD. 257 ITR 41 MAY H AVE TAKEN A CONTRARY VIEW, IT ONLY ESTABLISHES LEGAL DEBATE ON THE TURNO VER ISSUE. IN THIS EVENTUALITY ALSO HONBLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS 88 ITR 192 CASE HAS HELD THAT WHEN MORE THAN ONE MEANI NG IS POSSIBLE THEN THE VIEW FAVORABLE TO THE TAXPAYER SHOULD BE ADOPTED. 4.2 LD COUNSEL TO DEMONSTRATE THAT AO HAD APPLIED DUE MIND TO CALCULATION FOR DEDUCTION U/S 80HHC, ADVERTED TO VA RIOUS PAGES OF PAPER BOOK: - PB- 2-3- COMPUTATION OF INCOME SHOWING THAT ASSESS EE WAS HAVING BUSINESS INCOME FROM 3 CONCERNS AND DEDUCTION 80HHC WAS CLAIMED. - PB- 16-- REPORT OF 80HHC WHICH SHOWS THE CALCULATIO N OF DEDUCTION U/S 80HHC AS PER THE BOOKS - PB-4-8 - COPY OF ACCOUNT STATEMENTS INCLUDING BALAN CE SHEET OF M/S. ANITA INTERNATIONAL (EXPORT UNIT FOR WHICH SEPARATE BOOKS ARE MAINTAINED AND HAVE BEEN ACCEPTED BY AO) - PB-9-15 - TAX AUDIT REPORT OF M/S ANITA INTERNATION AL. - PB-19-20- BALANCE SHEET / PROFIT & LOSS OF EXPORT D IVISION. - PB-21-24 COPY OF BALANCE SHEET OF KATHURIA STEEL RO LLING MILLS. - PB-26-28 - LETTER TO LD. A.O. TOGETHER WITH BANK CE RTIFICATES SUBMITTING REGARDING BANK CERTIFICATES REGARDING EX PORT REALIZATION. - PB-29 - LETTER TO LD. A.O. DETAILS ABOUT EXPORT TUR NOVER. - PB-30-33 - CERTIFICATE OF EXPORT TURNOVER ISSUED BY C.A. - PB-34 -ANOTHER LETTER TO LD. A.O. - PB-39 - ANOTHER LETTER TO LD. A.O. REGARDING EXPORT PROCEEDS. - PB-40-46 - EVIDENCE OF EXPORT PROCEEDS FILED TO A.O . - PB-47-48 - ANOTHER LETTER TO LD. A.O. - PB- 50-94- EVIDENCES OF EXPORT PROCEEDS. - PB- 97-101 - ASSESSMENT ORDER SHOWING THAT DETAILS CALLED FOR WERE FILED, BOOKS OF ACCOUNT VERIFIED AND ASSESSING INC OME FROM 3 BUSINESS AND TAKING NOTE OF EXPORT DIVISION AND CU RTAILING / DEDUCTION U/S 80HHC AND CALCULATING DEDUCTION U/S 80HHC. - PB (100-103) ORDER OF LD. CIT(A) IN WHICH THE ISS UE OF DEDUCTION US/S 80HHC WAS BEFORE HIM AND DEALT WITH BY HIM. - PB-121-137 - WRITTEN SUBMISSIONS DURING 263 PROCEED INGS. 4.3 IT IS CONTENDED THAT ALL THE NECESSARY DISCLOSU RES AND SUBMISSIONS WERE MADE BEFORE AO WHO DULY VERIFIED THEM. BESIDES, IT IS A SETTLED LEGAL PROPOSITION THAT POWER OF CIT(A) ARE CO TERMINUS WI TH THAT OF AO AND CIT(A) CAN DO WHAT AO COULD NOT DO. WHEN THE ISSUE IN QUESTION HAS BEEN DULY CONSIDERED IN ASSESSMENT ORDER AND FURTHER ADJ UDICATED IN APPEAL BY LD. CIT(A) IN VIEW OF THE FOLLOWING DECISIONS, REVISION U/S 263 CAN NOT BE MADE BY CIT: - SONAL GARMENTS VS JT. CIT 95 ITD 363(MUM) - SAW PIPES LTD VS ADDL CIT 94 TTJ 1036(DEL) - SAHARA INDIA SAVINGS AND INVESTMENTS CORPN LTD VS A CIT 90 TTJ 878(LKW) - SAHARA INDIA MUTUAL BENEFIT COMPANY LTD VS ACIT 74 TTJ 67 (ALL) - HOOGHLY MILLS COMPANY LTD VS ACIT 71 ITD 264 (CAL) - SADHU RAM & SONS VS CIT 108 TTJ 373 (ASR) - MARICO INDUSTRIES VS ACIT 115 TTJ 497(MUM) 4.4 WHEN THERE WAS DEBATE ON ANY ISSUE AND AO ADOPT S ONE OF THE POSSIBLE VIEW, IT CAN NOT BE SAID THAT HIS ORDER WAS ERRONEO US OR PREJUDICIAL TO THE INTEREST OF REVENUE. CONSEQUENTLY POWER U/S 263 CAN NOT BE INVOKED, AS HELD BY SUPREME COURT IN THE CASE OF MAX 295 ITR 282 AND MALABAR INDUSTRIES 243 ITR 83. 5. LD. CIT (DR) CONTENDS THAT THERE WAS A CLEAR E RROR IN THE ASSESSMENT ORDER U/S 143(3), IN AS MUCH AS ASSESSING OFFICER F AILED TO AGGREGATE THE TOTAL TURNOVER OF ALL THE BUSINESS UNIT OWNED BY TH E ASSESSEE, IN TERMS OF KERALA HIGH COURT JUDGMENT IN THE CASE OF PARRY AGR O (SUPRA) AND THE SAME WAS PREJUDICIAL TO THE INTEREST OF REVENUE. APROPOS MERGER, THE ISSUE IN APPEAL DID NOT PERTAIN TO AGGREGATION OF TOTAL TURN OVER, THEREFORE, THIS ISSUE CANNOT BE SAID TO HAVE MERGED IN THE ORDER OF CIT(A ). IT IS FURTHER SUBMITTED THAT ON MERITS ALSO APPELLANT IS NOT ENTITLED TO AN Y RELIEF, CITS ORDER U/S 263 IF RELIED ON. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES & HAVE THROUGH THE ENTIRE MATERIAL BEFORE US. THE ASSESSEE MADE CL AIM U/S 80 HHC, BOOKS OF THE EXPORT DIVISION ARE SEPARATELY MAINTAINED WHICH CONTAINS COMPLETE DETAILS OF EXPORTS, TURNOVER, REALIZATION AND EXPOR T PROFITS. BOOK RESULTS OF EXPORT UNIT HAVE BEEN ACCEPTED BY AO AND HAVE NOT B EEN DOUBTED, WHILE FRAMING THE ASSESSMENTS AO HAS APPLIED HIS MIND WHI CH IS EVIDENT FROM THE ABOVE CORRESPONDENCE. THE VIEW ADOPTED BY AO IN RES PECT OF EXPORT TURNOVER AND ALLOW ABILITY OF DEDUCTION U/S 80HHC I S IN CONSONANCE OF MADRAS HIGH COURT JUDGMENT. IN OUR CONSIDERED OPINI ON IT CAN NOT BE HELD THAT AO COMMITTED AN ERROR IN CALCULATING DEDUCTION U/S 80-HHC MORE SO WHEN THE METHOD ADOPTED CONFORMS TO HONBLE MADRAS HIGH COURT, THOUGH ANOTHER VIEW OF HONBLE KERALA HIGH COURT EXISTED. IN THIS EVENTUALITY ALSO HONBLE SUPREME COURT IN VEGETABLE PRODUCTS CASE (S UPRA) HAS HELD THAT WHEN MORE THAN ONE MEANING IS POSSIBLE, THE VIEW FA VORABLE TO ASSESSEE SHOULD BE ADOPTED. CONSEQUENTLY THE IMPUGNED ASSESS MENT ORDER CAN NOT BE SAID TO BE ERRONEOUS. THIS VIEW IS SUPPORTED BY HON BLE SUPREME COURT DECISION IN THE CASE OF CIT VS. MALABAR 243 ITR 83 HOLDING THAT REVISIONARY JURISDICTION U/S 263 CANNOT BE EXERCISED UNLESS THE VIEW ADOPTED WAS WHOLLY UNSUSTAINABLE IN LAW OR ON FACTS:- 6.1. SINCE THE ISSUE OF DEDUCTION U/S 80HHC IN THE PRESENT CASE WAS CONSIDERED DURING ASSESSMENT PROCEEDINGS AND WHICH VIEW WAS IN CONSONANCE WITH MADRAS HIGH COURT DECISION IN THE C ASE REPORTED AT 257 ITR 60 AND THE SAME BEING A PLAUSIBLE VIEW, REVISIO NARY POWER INVOKED BY CIT U/S 263 CANNOT BE SUSTAINED. 6.2. CIT IN IMPUGNED ORDER IS AWARE ABOUT MADRAS HI GH COURT JUDGMENT BUT WAS OF THE OPINION THAT KERALA HIGH COURT IN TH E CASE OF INDIAN SPICES COMPANY VS. CIT 267 ITR 445 HAS CONSIDERED THE ABOV E MADRAS HIGH COURT DECISION. CIT CHOSE TO FOLLOW KERALA HIGH COURT DEC ISION WHEREAS AOS VIEWS FIND SUPPORT IN MADRAS HIGH COURT. IT IS THUS EVIDENT THAT THE CIT ALSO RECOGNIZED THAT THE ISSUE INVOLVED A JUDICIAL DEBAT E. THIS BEING SO HONBLE SUPREME COURT IN THE CASE OF MAX INDIAN 295 ITR 282 AND DELHI HIGH COURT IN CASE REPORTED AT 329 ITR 289 AND P&H HIGH COURT IN CASE REPORTED AT 329 ITR 603 HAVE HELD THAT SUCH ISSUE IS NOT AMENAB LE TO BE REVISED U/S 263. THEREFORE IN OUR VIEW CIT ERRED IN ASSUMING JURISD ICTION U/S 263 ON AN ISSUE WHICH HE ACCEPTS BEING DEBATABLE. 6.3. THE ISSUE OF DEDUCTION U/S 80HHC WAS APPEALED AGAINST, THE CIT (A) VIDE HIS ORDER DATED 06.12.2004 DEALT WITH THE ISSU E OF DEDUCTION U/S 80HHC AND ACTION OF THE AO IN REDUCING THE DEDUCTION U/S 80HHC WAS SUSTAINED. IT IS ALSO UNDISPUTED THAT CIT (A) APART FROM BEING AP PELLATE AUTHORITY HAS COTERMINOUS POWERS OF AO AND HAS POWERS OF ENHANCEM ENT OF ASSESSMENT. IF THERE IS AN APPEAL ON THE CALCULATION OF DEDUCTION U/S 80HHC, IT IS LOGICAL THAT CIT(A) WILL CONSIDER THE ASPECTS OF CALCULATIO N. THEREFORE, IN OUR VIEW AOS ORDER ALSO GOT MERGED INTO THE CIT(A) ORDER WHI CH CAN NOT BE REVISED. 6.4. MUMBAI ITAT IN THE CASE OF SONAL GARMENTS VS . JOINT CIT 95 ITD 363, IN SIMILAR SITUATION, HAS HELD THAT IT HAS BE EN DEMONSTRATED BY THE CHRONOLOGY OF EVENTS THAT COMPUTATION OF DEDUCTION U/S 80HHC WAS A SUBJECT MATTER OF APPEAL BEFORE CIT(A). THE CIT(A) HAS GIVEN SOME FINDINGS ON THE COMPUTATION OF DEDUCTION U/S 80HHC. THEREFORE, THE ASSESSMENT ORDER HAD MERGED WITH THE ORDER OF CIT(A ). THUS UNDER EXPLANATION (C) TO SECTION 263(1), SUCH ACTION OF C IT WAS NOT PERMISSIBLE. THE WORD MATTER IS CERTAINLY A WORD OF WIDE IMPOR T AND REPRESENTS A SUBJECT OF SITUATION THAT ONE NEEDS TO THINK ABOUT, DISCUSS OR DEAL WITH. THUS, IT IS DIFFICULT TO ACCEPT THE SUBMISSION OF THE DEP ARTMENT THAT THE ISSUE OF DEPRECIATION BEING OPTIONAL OR THE ISSUE THAT ASSES SEE WAS AT ALL ENTITLED TO DEDUCTION U/S 80HHC OR NOT WAS NOT A SUBJECT MATTER OF APPEAL FILED BY THE ASSESSEE BEFORE CIT(A). A MATTER MAY HAVE MANY ASP ECTS AND THE ABOVE MENTIONED TWO FACTORS MAY BE THE ASPECTS OF THE MA TTER BUT NOT ENTIRE MATTER ITSELF. THE MATTER IN THE PRESENT CASE I S DEDUCTION U/S 80HHC. THEREFORE, ASSESSMENT ORDER AS IT RELATES TO DEDUCT ION U/S 80HHC HAD MERGED WITH THE ORDER OF CIT(A), THEREFORE, EXERCIS E OF POWER BY CIT U/S 263 WAS EVEN NOT AVAILABLE UNDER EXPLANATION (C) TO SECTION 263(1). 6.5. IN OUR VIEW THE SITUATION IS APTLY ANSWERED BY ABOVE JUDGMENT. THEREFORE, THE ORDER OF AO ON THE ISSUE OF CALCULA TION OF DEDUCTION U/S 80HHC HAVING GOT MERGED INTO CIT (A) ORDER, THE STA TUTORY BAR CONTAINED IN EXPLANATION TO SEC 263(1) COMES INTO PLAY. WE UPHEL D THE PLEA OF LD. COUNSEL THAT THE PROCEEDINGS U/S 263 HAVE NOT BEEN VALIDLY INVOKED AND THE REVISION ACTION IS QUASHED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED ORDER PRONOUNCED IN OPEN COURT ON 20-05-2011. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20-05-2011. MP COPY FORWARDED TO: (1) ASSESSEE (2) AO (3) CIT (4) CIT(A) (5) DR