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August, 12th 2013
+       INCOME TAX APPEAL NO. 294/2013
                                      Date of decision: 19th July, 2013
                                                         ..... Appellant
                          Through Mr. Abhishek Maratha, Sr. Standing
                          Counsel & Ms. Anshul Sharma, Advocate.


                                                       ..... Respondent
                          Through Nemo.



        This appeal by the Revenue, which pertains to Assessment Year

2005-06, has to be dismissed in view of the authoritative

pronouncement of the Supreme Court in Commissioner of Income Tax

versus Alagendran Finance Limited, (2007) 293 ITR 1 (SC).

2.      Relevant facts in brief may be noticed. Return filed by the

assessee for Assessment Year 2005-06 was taken up for scrutiny and

income was assessed at Rs.860,18,30,950/- vide assessment order

dated 31st December, 2007 after the setting off of brought forward

loses and unabsorbed depreciation amounting to Rs.1941,17,35,146/-.

ITA No. 294/2013                                              Page 1 of 4
3.      There appears to be another order under Section 154 read with

Section 143(3) dated 7th March, 2008, where the income under the

normal provisions was assessed as "nil" after setting off brought

forward losses and unabsorbed depreciation and the book profits were

assessed at Rs.1724,82,75 449/- under Section 115JB of the Act.

4.      Subsequently, the Assessing Officer issued notice under Section

147 and an order under Section 147 read with Section 143(3) dated 10th

December, 2009 was passed. In the re-assessment order, two additions

were made in respect of non-deduction of tax at source on payment of

interest to ABN Amro Bank, Stockholm Branch. The second addition

was made on account of ESOP expenses. The said order also discusses

set off or brought forward loss or unabsorbed depreciation.

5.      Subsequently, the Commissioner of Income Tax Delhi - I made

an order under Section 263 of the Act dated 24th March, 2011 for

failure to deduct TDS under Section 194H on free air time provided to

distributors and under Section 194J on roaming charges paid to other

network operators. The Commissioner invoked Section 40(a) (ia) to

make the said disallowance.

6.      Section 263(2) of the Act postulates and prescribes time limit of

two years as it stipulates that no order in revision will be passed by the

Commissioner after expiry of two years from the end of the financial

year in which the order sought to be revised was passed.

ITA No. 294/2013                                                Page 2 of 4
7.      The question raised is whether the first order under Section

143(3) dated 31st December, 2007 or the second order under Section

147 read with Section 143(3) dated 10th December, 2009 will be the

starting point of limitation under Section 263(2) of the Act. If the first

order dated 31st December, 2007 is taken as the starting point, the order

passed under Section 263, dated 24th March, 2011 is barred by

limitation, but if we treat the second order dated 10th December, 2009

under Section 147/143(3) as the starting point, the order passed on 24th

March, 2011 will be within time.

8.      It is factually correct and cannot be disputed that the two

aspects/questions, which have been dealt with and additions which

have been made in the order under Section 263 dated 24th March, 2011,

have not been dealt with or examined in the second assessment or the

re-assessment order dated 10th December, 2009. The second order or

the re-assessment order is on different aspects. In these circumstances,

the decision of the Supreme Court in Alagendran Finance Limited

(supra) is clearly applicable and the following ratio is binding on us:-

                   "We, therefore, are clearly of the opinion that keeping in
                   view the facts and circumstances of this case and, in
                   particular, having regard to the fact that the
                   Commissioner of Income-Tax exercising its revisional
                   jurisdiction reopened the order of assessment only in
                   relation to lease equalisation fund which being not the
                   subject of the reassessment proceedings, the period of
                   limitation provided for under sub-section (2) of section
                   263 of the Act would begin to run from the date of the
                   order of assessment and not from the order of

ITA No. 294/2013                                                            Page 3 of 4
                   reassessment. The revisional jurisdiction having, thus,
                   been invoked by the Commissioner of Income Tax
                   beyond the period of limitation, it was wholly without
                   jurisdiction rendering the entire proceeding a nullity."

9.      In the said case, second or re-assessment order was passed under

Section 147 of the Act.              Order under Section 263 passed by the

Commissioner was held to be barred by limitation as the subject matter of

additions made in the said order were not dealt with in the reassessment

order. Thus doctrine of merger it was held would not apply and limitation

would begin from the date of the first or original assessment order.             It has

been     held      that   once    reassessment    order    was    passed,     original

underassessment was set aside, to the extent of underassessment but not in

respect of matters covered by the original assessment and not subject matter

of reassessment proceedings or order. Earlier judgments in Hind Wire

Industries Limited versus Commissioner of Income Tax, (1995) 212 ITR

639 (SC), Commissioner of Income Tax vs. Sun Engineering Works

Private Limited (1992) 198 ITR 297 (SC) and other cases, were examined

before the said opinion and ratio was expounded.

        The appeal is accordingly dismissed.

                                                       SANJIV KHANNA, J.

                                               SANJEEV SACHDEVA, J.
JULY 19, 2013

ITA No. 294/2013                                                            Page 4 of 4
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