Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of order prejudicial to interest of revenue - Assessment year 2002-03 - While making assessment of assessee-bank for relevant assessment year, Assessing Officer noted that assessee had claimed depreciation on current investments and had shown certain capital gain earned on long-term investments - He made enquiry and after considering details of investments and explanation of assessee on both counts, completed assessment - However, thereafter, Commissioner, exercising power under section 263, set aside assessment and directed Assessing Officer to reframe assessment after conducting enquiry on aforesaid two issues - Whether when in order of assessment, Assessing Officer, after making enquiry and eliciting response from assessee, had come to conclusions that capital gain in question was earned on long-term investments held for a period in excess of one year which assessee treated as investments held to maturity; and that assessee was entitled to depreciation claimed on value of securities held in trading account, Commissioner was justified in exercising jurisdiction under section 263 in instant case - Held, no FACTS The assessee was a bank. During the assessment proceedings for the relevant assessment year, the Assessing Officer noted that in the compu- tation of the total income of the assessee, depreciation on current investments was computed at Rs. 6.22 crores. The assessee was called upon to clarify the treatment of depreciation. In response, the assessee filed details of current investment and clarified that depreciation was claimed against the investments held and classified as stock-in-trade. The Assessing Officer also sought details of capital gains of Rs. 1.26 crores earned by the assessee during the relevant assessment year. In response, the assessee filed details of investments which were held as permanent investments and were sold during the relevant assessment year. On being satisfied with the assessees explanation on both counts, the Assessing Officer completed the assessment. Thereafter, the Commissioner, by passing an order under section 263(1), set aside the assessment order and directed the…

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