AJIT K. SENGUPTA, J. ( 1 ) THIS reference under Section 256 (1) of the Income-tax Act, 1961, relates to the assessment years 1976-77 and 1977-78. ( 2 ) THE common question suggested by the assessee for the assessment years 1976-77 and 1977-78 is as under :"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the loss incurred by the assessee due to fluctuation in exchange rates on repayment of instalments of loan in foreign currency was capital in nature and as such, the Commissioner of Income tax was justified in invoking the provisions of Section 263 of the Income-tax Act, 1961?" ( 3 ) THE questions suggested by the Revenue for the assessment year 1977-78 are as follows :" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Commissioner of Income tax had no jurisdiction to pass an order under Section 263 of the Income-tax Act, 1961, after an order was passed by the Commissioner of Income-tax (Appeals) relating to the same assessment ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order of the Commissioner of Income-tax and restoring that of the Income-tax Officer. " ( 4 ) THE facts shortly stated are that the assessee-company took loans from Alegemene Bank Nederland N. V. , Holland, in Dutch Guilders and from the Industrial Credit and Investment Corporation of India Ltd. in Japanese Yen and D. M. The said loans were to be repaid as per the terms of the agreement in Dutch Guilders, Japanese Yen and D. M. At the time of repayment of these loans in instalments during the previous years relevant to the assessment years under reference, the assessee-company had to pay more money in terms of Indian rupees on account of variation in the exchange rate and thereby incurred losses. The assessee claimed before the Income-tax Officer that the excess amount paid in repayment of loans was allowable as business loss or business expenditure. The Income-tax Officer accepted that claim and allowed the same as deduction while computing the income of the assessee for both the years under consideration. The assessee claimed before the Income-tax Officer that the excess amount paid in repayment of loans was allowable as business loss or business expenditure. The Income-tax Officer accepted that claim and allowed the same as deduction while computing the income of the assessee for both the years under consideration. ( 5 ) SUBSEQUENTLY, the Commissioner of Income-tax found that the allowance was erroneous in the light of the decision of this court in the case of Bestobell (India) Ltd. [1979] 117 ITR 789, and the orders of the Tribunal in the assessee's own case for the assessment year 1974-75. Accordingly, the Commissioner of Income-tax invoked the provisions of Section 263 and directed the Income-tax Officer to disallow the exchange loss allowed in the assessment. ( 6 ) AGAINST the said order of the Commissioner of Income-tax, the assessee preferred appeals before the Tribunal and it was contended on behalf of the assessee that, in view of the principles laid down by the Supreme Court in the case of India Cements Ltd. [1966] 60 ITR 52, the order of the Tribunal for the assessment year 1974-75 needs reconsideration and that the judgment of this court in the case of Bestobell (India) Ltd. [1979] 117 ITR 789, should not be followed as the said judgment was delivered by this court before the Supreme Court delivered the judgment in the case of Sutlej Cotton Mills Ltd, [1979] 116 ITR 1, in which it has been observed that, if the borrowed money is held on capital account, the loss suffered on account of exchange difference should be capital but, if it is held on revenue account, the exchange loss should be revenue in nature. It was, therefore, submitted that, in view of the principle laid down by the Supreme Court in the aforementioned two cases, the Income-tax Officer had not committed any error in allowing the assessee's claim for exchange loss and as such the Commissioner of Income-tax was wrong in invoking the provisions of Section 263 of the Act on the facts of the case. A legal issue had also been raised for the assessment year 1976-77 regarding the jurisdiction of the Commissioner of Income-tax under Section 263 in an assessment which has merged with the order of the Commissioner of Income-tax (Appeals ). On behalf of the Revenue, the orders of the Commissioner of Income-tax for both the years were supported. A legal issue had also been raised for the assessment year 1976-77 regarding the jurisdiction of the Commissioner of Income-tax under Section 263 in an assessment which has merged with the order of the Commissioner of Income-tax (Appeals ). On behalf of the Revenue, the orders of the Commissioner of Income-tax for both the years were supported. ( 7 ) THE Tribunal held that, in view of the principle laid down by the Supreme Court in the case of Sutlej Cotton Mills Ltd. [1979] 116 ITR 1, the order of the Tribunal for the assessment year 1974-75 was just and proper. The Tribunal found that this court, in the case of Bestobell (India) Ltd, [1979] 117 ITR 789, has considered the decision of the Supreme Court in the case of India Cements Ltd. [1966] 60 ITR 52 and distinguished the same on facts. The Tribunal, therefore, following its earlier order, held that the Commissioner of Income-tax was justified in invoking the provisions of Section 263 for both the years under consideration on merits. ( 8 ) THE Tribunal, however, found that in regard to the legal issue raised by the assessee, the same has been concluded against the Revenue by the order of the Tribunal's Special Bench at Bombay in the case of Dwarkadas and Co. (P.) Ltd. , Bombay in I. T. A. No. 1852/ (Bom) of 1977-78, wherein the Tribunal, after consideration of the decisions of the various courts has held that the Commissioner has no jurisdiction under Section 263 to revise the order of the assessment as, after the order of the Appellate Assistant Commissioner/commissioner of Income-tax (Appeals), the assessment order had ceased to exist. The Tribunal, therefore, set aside the order of the Commissioner of Income-tax (Appeals) for the assessment year 1976-77 on the legal issue and restored that of the Income-tax Officer. ( 9 ) WE shall first take up the questions which have been raised by the Revenue. The Tribunal held that, since the order of the Income-tax Officer has merged with the order of the Appellate Assistant Commissioner/ Commissioner of Income-tax (Appeals), the assessment order had ceased to exist. Accordingly, the Commissioner of Income-tax did not have any jurisdiction to invoke the provisions of Section 263 of the Act. ( 10 ) IN our opinion, this view of the Tribunal cannot be sustained. Accordingly, the Commissioner of Income-tax did not have any jurisdiction to invoke the provisions of Section 263 of the Act. ( 10 ) IN our opinion, this view of the Tribunal cannot be sustained. It is only in respect of such matter which has been considered and decided by the appellate authority that the Commissioner of Income-tax cannot exercise his power of revision under Section 263. But if the matter in respect whereof revisional jurisdiction is sought to be invoked was not before the appellate authority, the Commissioner can revise such matter as it remained untouched by the appellate authority. To that extent, there is no merger and the order of the Income-tax Officer does not cease to exist altogether. In such a case, the Commissioner of Income-tax has jurisdiction to invoke the provisions of Section 263 of the Income-tax Act. ( 11 ) WE may add that, by the Finance Act, 1988, the provisions of Section 263 of the Act have been amended to clarify that the Commissioner would be competent to revise an order of assessment passed by an Assessing Officer on all matters except those that have been considered and decided by the appellate authority. ( 12 ) THE Explanation to Section 263 which was substituted with effect from June 1, 1988, has been further amended by the Finance Act, 1989, to clarify that the said Explanation must be deemed to have been always in existence. In this case, the loss was allowed as a revenue loss. The assessee did not prefer any appeal against such determination. Therefore, the appellate authority had no occasion to consider or decide whether the loss was rightly allowed or not. In our view, the question whether the loss arising out of devaluation is capital loss or revenue loss was not the subject-matter of the appeal before the appellate authority and, accordingly, the Commissioner of Income-tax had jurisdiction to revise the order of assessment. ( 13 ) FOR the foregoing reasons, both the questions raised at the instance of the Revenue are answered in the negative and in favour of the Revenue. The only question referred to this court at the instance of the assessee must be answered in the affirmative and in favour of the Revenue in view of the decision in Bestobell (India) Ltd. v. CIT. There will be no order as to costs.