The assessee declared the income as “nil” after deduction under section 80-IB(10) of the Act. The deduction was allowed by the Assessing Officer. The DIT (E ) held that the order passed by the Assessing Officer was prejudicial to the interests of the Revenue. On appeal the Tribunal held that the Assessing Officer should have examined the claim for exemption under section 80-IB(10). However it held that in the light of the retrospective amendment of the law, the application of income for charitable purposes was irrelevant and that income derived from business could not be considered as income derived from the property held for charitable purposes. The Tribunal, therefore, set aside the order passed under section 263 and allowed the appeal preferred by the assessee. On appeal  the Court held that   the Tribunal had recorded the finding that the Assessing Officer should have examined the claim for deduction of the assessee in the light of section 11. The Tribunal thereafter could not have proceeded to examine the matter on the merits after setting aside the order under section 263 of the Act with reference to section 13(8) of the Act as the merits of the matter were not the subject matter of the appeal before the Tribunal. The order of the Tribunal was liable to be quashed. The order passed by the DIT (E), in so far as it contained a direction to the Assessing Officer to disallow the deduction under S. 80IB(10) was also liable to be quashed. Matter remanded to the Assessing Officer.( AY.2009-10)