Judgment :- R. JAYASIMHA BABU, J. The questions referred to us at the instance of the Revenue are as follows: "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in entertaining a new ground not taken at any stage of the proceedings under section 263 of the Income-tax Act, 1961, to cancel an order under that section of the Commissioner of Income-tax ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the assessment order of the Inspecting Assistant Commissioner (Assessment), which was the subject-matter of the revision order under section 263 had merged in the order of the appellate authority ?" The assessment year is 1977-78, The assessee is a manufacturer of power supply meter equipment, who claimed investment allowance for installing new machinery. Though the assessee had filed an appeal against the assessment, investment allowance was not one of the grounds in respect of which the appeal had been filed. The Commissioner exercised his revisional jurisdiction under section 263 of the Act on the ground that the assessee was not entitled to the investment allowance since the manufacture of meters does not amount to generation or distribution of electricity or any other form of power referred to in section 32A(2)(b) of the Act and that meters are also not covered by item No. 5 of the 1Xth Schedule which refers to thermal and hydro power generation equipment. The Tribunal has set aside the order of the Commissioner on the ground that the Commissioner had no jurisdiction to revise the order in view of the fact that the order of 'assessment had merged with the order of the appeal. That view of the Tribunal is plainly untenable and is not in conformity with the law declared by the Supreme Court in CWT v. U. C. Mehatab, wherein it has been held by the apex court that the jurisdiction under section 263 of the Act is unaffected by any appellate order, if the subject-matter of the appeal was not the subject-matter of the revision. The ground referred to in the first question is the ground that the revisional jurisdiction cannot be exercised if the original order has merged with the order in appeal. The ground referred to in the first question is the ground that the revisional jurisdiction cannot be exercised if the original order has merged with the order in appeal. Such a ground is only a question of law which it was open to the assessee to raise, and it was within the jurisdiction of the Tribunal to have allowed that question to be raised. The Tribunal, however, has not gone into the correctness of the order of the Commissioner or the merits. We therefore direct the Tribunal to examine the assessee's case on the meritsOur answer to the second question is, therefore, in favour of the Revenue and against the assessee. Though the first question is in favour of the assessee, that is of no help to the assessee, in view of our answer to the second question. No costs