Revision u/s 263 cannot be made on a issue which was never a part of the assessment order to be revised.


Nilkanth Developers vs PCIT – 3 [ITA No.95/ SRT/2020]

Facts of the case

Assessment order u/s. 143(3) was passed 26.03.2013  for A.Y.2010-11 disallowing deduction claimed u/s. 80IB(10) of Rs.1,25,78,872/-. The same was confirmed by CIT(A) but on further appeal before ITAT, the same was allowed in favour of assessee.

Notice u/s. 148 was issued and order u/s. 143(3) r.w.s 147 was passed on 22.09.2017 for A.Y. 2010-11 proposing to reduce the deduction claimed by the amount of interest and remuneration payable to partners on notional basis.

PCIT passed order u/s. 263 on 16.03.2020 revising the assessment made u/s. 147  on 22.09.2017 disallowing the deduction claimed u/s.80IB(10).

Assessee’s Contention

The subject matter of revision u/s.263 being unconnected with the issues which were subject matter of the assessment under 143(3) r.w.s 147, the order passed by the Ld. PCIT was proposing to revise the original assessment made u/s. 143(3) for which the action has become time barred.

Crux of the case

  • Revision cannot be made on a issue which was not part of the Order to be revised.
  • No order under section 263(1) after the expiry of 2 years from the  end  of  the  financial  year  in  which  the  order  sought  to  be  revised  was passed.

Reliance placed on

Malabar Industries Ltd. vs. CIT (243 ITR83)

Alagendran Finance Ltd. (2007) 162 Taxman 465 (SC)

H.P. Cotton Textile Mills Ltd (311 ITR 436)

ITAT ruled in favour of assesse.

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