INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Assessee contended that issue was subject-matter of appeal before CIT(A) -

Assessee was engaged in manufacture of garments and also in export of traded garments (i.e., purchased and exported). AO allowed the deduction under section 80-I only qua the manufactured goods exported out of India. Assessee claimed deduction under section 80-I on export of traded goods and contended that labelling and packing of the goods bought from market tantamount to manufacture. While the issue as regards eligibility of deduction under section 80-I was before Tribunal, notice under section 263 was issued to assessee on allegation that AO erred in allowing deduction under section 80-I on duty drawback received on manufactured goods. Assessee challenged validity of revisionary jurisdiction assumed under section 263 on allegation that same issue was dealt by CIT(A). Held: Tribunal rightly observed that the issue whether deduction under section 80-I was available on duty drawback on manufactured goods was never specifically dealt in appeal. There was no occasion for raising the issue as the deduction was allowed by AO. Issue whether the assessee was entitled to deduction under section 80-I on duty drawback with regard to goods manufactured and exported was neither considered nor decided in appeal. The reliance on certain part of the order by assessee was not well founded. Issue taken up in revision was not subject-matter of appeal.

Distinguished:CIT v. Mehsana District Co-operative Milk Producers Union Ltd. (2003) 130 Taxman 235 (Guj.) : 2003 TaxPub(DT) 1178 (Guj-HC).

REFERRED : CIT v. Sterling Foods (1999) 237 ITR 579 (SC) : 1999 TaxPub(DT) 1271 (SC) and CIT v. Nahar Spinning Mills Ltd. [ITA No. 151 of 1999, decided on 9-11-2010].