2012 (2) TMI 132 - HC - Income Tax

Period Of Limitation - AO passed order on 27.2.97 - afresh order passed on 31.03.97 - No variance in order facts were on record ever since original order - Held That - Order passed by the Commissioner in exercise of the revisional jurisdiction on 20.2.2001 is clearly out of time insofar as it relates to order dated 27.2.1997 relating to the assessment year 1994-95. Tribunal correct in rejecting order of CIT.

Summary

Issues:
1. Interpretation of Double Taxation Avoidance Agreement (DTAA) regarding tax credit.
2. Jurisdiction under Section 263 of the Income Tax Act.
3. Computation of period of limitation for revisional orders.

Analysis:

1. The case involved the interpretation of the DTAA regarding the tax credit claimed by the assessee in Canada and Thailand. The Tribunal had to determine whether the Assessing Officer should rework the credit without specifying the error in the original order and how it was prejudicial to the revenue. The Tribunal also had to assess if the income falling under the DTAA with Canada and Thailand could be considered for deduction in India. Additionally, the Tribunal examined the applicability of a judgment by the Supreme Court in a similar case under Section 263 of the Act.

2. The assessee, a company for the assessment year 1994-95, was subject to a revisional order by the Commissioner of Income Tax under Section 263 of the Act. The Tribunal allowed the assessee's appeal, setting aside the revisional order based on grounds of limitation for the assessment year in question. The Tribunal was tasked with reviewing the Commissioner's order, which was beyond two years from the date of the original assessment order. The Revenue argued that a subsequent order by the assessing authority should reset the period of limitation, but the Tribunal found that the original order remained unchanged and the Commissioner's order was time-barred.

3. The primary issue addressed by the Tribunal was the computation of the period of limitation for the revisional order. The Commissioner's order, issued on 20.2.2001, was found to be beyond the two-year limit from the date of the original assessment order. Despite arguments by the Revenue that a subsequent order should reset the limitation period, the Tribunal held that the original order's content remained unchanged, leading to the dismissal of the appeal on grounds of limitation. The Tribunal's decision highlighted the importance of adhering to statutory timelines in exercising revisional jurisdiction under the Income Tax Act.

In conclusion, the High Court of Karnataka dismissed the appeal by the Revenue, emphasizing the significance of adhering to statutory timelines in revisional orders under the Income Tax Act and upholding the Tribunal's decision regarding the limitation period for the revisional order.