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Section 263, read with section 50, of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1996-97 - Commissioner, in exercise of his powers under section 263, reopened assessee-company's assessment on ground that since it had not filed returns or claimed depreciation on theatre building for several years, depreciation should not be reckoned in computation of capital gains on sale of theatre building - Tribunal interfered with Commissioner's order without conclusively deciding on merits that assessee was entitled to reckon depreciation in computation of capital gains on sale of theatre building under section 50 - It was noted that Tribunal had considered divergent views expressed by various High Courts and held that in view of difference of opinion, assessee was entitled to a view that was favourable to it - Whether Tribunal could not interfere with order of Commissioner passed under section 263 except on merits - Held, yes - Whether since Tribunal had not considered issue on merits, its impugned order was to be set aside and matter was to be remanded to officer for completion of assessment pursuant to order of Commissioner under section 263 - Held, yes CASES REFERRED TO Sri Rajarathinam Transports (P.) Ltd. v. CIT [1993] 199 ITR 203/ 71 Taxman 128 (Mad.) [Para 2] and CIT v. Haryana Hotels Ltd. [2005] 276 ITR 521/ 148 Taxman 373 (Punj. & Har.) [Para 2]. P.K.R. Menon and George K. George for the Appellant. K.R. Sudhakaran Pillai and Sajith Kumar V. for the Respondent. JUDGMENT C.N. Ramachandran Nair, J. - This appeal is filed by the revenue against Annexure-C order of the Tribunal vacating suo motu revisional order passed by the Commissioner under section 263 of the Income-tax Act directing revision of respondent's assessment for the year 1996-97. The assessment originally completed was reopened on three grounds. In the first place, the Commissioner noticed that since assessee had not filed returns or claimed depreciation for the theatre building for several years, depreciation should not be reckoned in the computation of capital gains on the sale of the theatre building. Similarly, deduction of retrenchment…

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