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Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1996-97 - Whether where jurisdiction under section 263 is sought to be exercised with reference to an issue which is covered by original order of assessment under section 143(3) and which does not form subject-matter of reassessment, period of limitation of two years under section 263(2) must necessarily begin to run from order under section 143(3) - Held, yes [In favour of assessee] FACTS An order of assessment was passed on 10-3-1999 under section 143(3). The deduction claimed under clauses (vii) and (viia) of section 36(1) and the foreign exchange rate difference was allowed. A notice was issued under section 148 on 21-10-1999 following which the first reassessment was carried out on 22-2-2000 for reworking a deduction under section 80M. An appeal against the order under section 143(3) was decided by the Commissioner (Appeals) on 28-3-2001. Thereafter a second notice was issued under section 148 on 28-3-2001. Following that on 26-3-2002 a second order of reassessment was passed for reworking of the deduction under section 36(1)(viii). This order was set aside by the Tribunal on 27-8-2010 and an appeal was pending. On 28-3-2003 an order was passed by the Commissioner under section 263 for disallowance under section 36(1)(vii), (viia) and in respect of foreign exchange rate difference. On further appeal, Tribunal held that order of the Commissioner dated 28-3-2003 passed under section 263 setting aside the assessment order dated 26-3-2002 passed under section 143 read with section 147 by the Assessing Officer was barred by limitation under section 263(2). On revenue's appeal: HELD Sub-section (2) of section 263 stipulates a period of limitation of two years within an order under sub-section (1) has to be passed. Under sub-section (2) no order under section 263(1) can be made after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. The order of assessment under section 143(3) in the instant case allowed the deduction which was claimed under section 36(1)(vii ), and in respect of foreign…

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