Decide the correctness of the views of the Tax Counsel and suggest the course of action to be pursued by the Company in respect of the Income-tax…

(i) In respect of appeal preferred by HCL before the CIT (A) for A.Y. 2023-24 HCL has filed an appeal against the order of the Assessing Officer against certain additions. While appeal was pending disposal, the CIT invoked its revisionary power u/s 263 in respect of other issues which have not been dealt with in the assessment order. The doctrine of partial merger holds good for section 263. Where the order passed by the A.O. has been the subject matter of any appeal, the powers of the Commissioner u/s 263 shall extend to such matters as had not been considered and decided in such appeal. In this case, the commissioner can invoke its revisionary power u/s 263 in respect of other issues which have not been dealt with in the assessment order. Even for the subject matter of appeal, it has not been yet considered and decided in the CIT(A). Accordingly, the view of tax counsel that the doctrine of total merger would apply in this case and the revision proposed is bad in law is not correct. (ii) In respect of appeal preferred by HCL before the Appellate Tribunal for A.Y. 2024-25 HCL has filed an appeal against the order of the CIT(A) against the denial of depreciation. For disallowance u/s 40A (2) , it did not file the appeal but filed a revision petition before commissioner u/s 264. The concept of total merger would apply in case of section 264. The Commissioner of Income-tax has no power to revise any order under section 264, if the order has been made subject to an appeal to the Appellate Tribunal, even if the relief claimed in the revision is different from the relief claimed in the appeal and irrespective of the fact whether the appeal is by the assessee or by the Department. Accordingly, the view of tax counsel that the action of the commissioner is not tenable in law is not correct.