V.A. Mohta, J.

1. This is a reference at the instance of the Commissioner of Income Tax, Nagpur, under section 256(1) of the Income Tax Act, 1961 ("the I.T. Act"), on the following two questions :

"1. Whether, on the facts and circumstances of the case, the assessee-firm was entitled to deduction under section 80HH for the assessment years 1981-82 and 1982-83 and section 80J deduction for the assessment year 1982-83

2. Whether, on the facts and circumstances of the case, the Commissioner of Income Tax had jurisdiction under section 263 for the assessment years 1981-82 and 1982-83 to restore the matter to the Income Tax Officer "

2. The assessee is a firm. It has branches in backward areas. It carries on the business of construction of buildings, transportation and manufacture and supply of bricks. For the use in construction activity, the assessee also manufactures windows, concrete slabs, etc. For the assessment years 1980-81 and 1981-82, it claimed deduction under section 80HH of the Income Tax Act. This deduction was allowed for the assessment year 1980-81 without discussion. Assessment became final. In allowing the deduction for the assessment year 1981-82, the Income Tax Officer relied upon the Orissa High Court decision in the case of CIT v. N. C. Budharaja and Co. : [1980]121ITR212(Orissa) which was the only decision then operating in the field. The assessee had preferred an appeal before the Commissioner of Income Tax (Appeals) for the assessment year 1981-82 on certain other issues. For the assessment year 1982-83, the Income Tax Officer again allowed deduction under section 80HH. For branches in backward areas deduction was allowed for the first year in the assessment year 1982-83. The Commissioner, in revisional jurisdiction under section 263, passed orders dated July 16, 1983, and August 30, 1983, quashing the orders for the assessment years 1981-82 and 1982-83. Against those two orders, the assessee preferred appeals before the Tribunal which have been disposed of by a common judgment.

3. The Tribunal allowed the appeals. It held that : (i) since the assessment order for the year 1981-82 was merged in the appellate order, revisional jurisdiction could not be exercised; (ii) the Assessing Officers order based on a binding decision of the High Court could not be interfered with in revisional jurisdiction; (iii) unless deductions allowed for the assessment year 1980-81 on the same ground were withdrawn, they could not be denied for the subsequent years.

4. That in view of the merger of the Income Tax Officers order for the assessment year 1981-82 in appeal, revisional jurisdiction could not be exercised is a settled position having been concluded against the Revenue by several decisions of this court including CIT v. P. Muncherji and Co. : [1987]167ITR671(Bom) .

5. The Calcutta High Court in the case of Russell Properties Pvt. Ltd. v. A. Chowdhury, Addl. CIT : [1977]109ITR229(Cal) and the Allahabad High Court in K. N. Agrawal v. CIT [1991] 189 ITR 769 have held that where the Income Tax Officers order is passed on the basis of a binding decision, revisional power under section 263 cannot be exercised to undo the said order. The Income Tax Officer is a quasi-judicial authority and the principle laid down is sound. We endorse the same.

6. Either in section 80HH or in section 80J, there is no provision for withdrawal of special deduction for the subsequent years for breach of certain conditions. Hence unless the relief granted for the assessment year 1980-81 was withdrawn, the Income Tax Officer could not have withheld the relief for the subsequent years. [See Gujarat High Court decision in the case of Saurashtra Cement and Chemical Industries Ltd. v. CIT : [1980]123ITR669(Guj) .

7. Hence, the approach of the Tribunal on all the counts has been perfectly legal. Question No. 2 thus will have to be answered in the negative and in favour of the assessee.

8. Our attention was drawn to the recent decision in the case of CIT v. Cellulose Products of India Ltd. : [1991]192ITR155(SC) in support of a contention that even on the merits the point stood concluded in favour of the assessee. It is unnecessary to go into this aspect of the matter in view of our above answer to question No. 2.

9. In the result, question No. 2 is answered in the negative and in favour of the assessee. Question No. 1 need not be answered. No order as to costs.