2023 (5) TMI 1290 - HC - Income Tax

Revision u/s 263 for order passed u/s 154 - Chargeability of taxation u/s 115QA - Tribunal noted that PCIT has exercised its revisional jurisdiction in respect of an order passed under Section 154 of the Act even when the subject matter of revision did not at all arise out of the said rectification order passed - HELD THAT - The issue was pertaining to levy of tax under Section 115QA which was examined by the assessing officer in the assessment proceedings. The Tribunal noted that assessment order having been passed on 28.12.2017 PCIT could have exercised its jurisdiction u/s 263 not later than 31.03.2019. PCIT exercised its jurisdiction on 10.06.2020 which is barred by limitation in respect of the assessment order which was passed on 28.12.2017. That apart the Tribunal noted that the assessee in the original assessment proceedings demonstrated that the provision of Section 115QA was not applicable to their case as the explanation to Section 115QA (1) as applicable prior to 01.06.2016. Buy-back means the purchase by the companies of its own shares in accordance with the provisions of the Section 77 of the Companies Act. Thus Tribunal noted that as per the said provision in force during the relevant assessment year the buy-back pursuant to order of Company Law Board will appear under Section 402 of the Companies Act was not included. Therefore the Tribunal on fact held that the PCIT was not justified in invoking the provisions of Section 263 of the Act. Thus we find that the Tribunal having examined the jurisdictional issue as well as on facts allowed the appeal filed by the assessee. No substantial questions of law

Summary

Issues involved:
The appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal, Kolkata for the assessment year 2015-16 raises the following substantial questions of law for consideration:

A) Jurisdictional Error in Quashing Order Under Section 154:
The Tribunal noted that the Principal Commissioner of Income Tax-3, Kolkata (PCIT) exercised revisional jurisdiction under Section 263 of the Act in relation to an order passed under Section 154, even though the subject matter did not arise from the said rectification order. The assessment under Section 143(3) was completed on 28.12.2017. The Tribunal found that PCIT's exercise of jurisdiction on 10.06.2020 was time-barred as it should have been done by 31.03.2019. Additionally, the Tribunal observed that the assessee demonstrated in the original assessment that Section 115QA was not applicable to their case due to the specific provisions of the Companies Act regarding buy-backs. Consequently, the Tribunal held that PCIT was not justified in invoking Section 263.

B) Taxability of Distributed Income under Section 115QA:
The issue revolved around the levy of tax under Section 115QA. The assessing officer had examined this during the assessment proceedings. The Tribunal found that the provision of Section 115QA was not applicable to the assessee's case as per the relevant provisions in force during the assessment year. The Tribunal highlighted that buy-backs pursuant to the order of the Company Law Board were not included in the scope of Section 115QA. Therefore, the Tribunal concluded that PCIT's invocation of Section 263 was unwarranted based on the facts presented during the original assessment proceedings.

In conclusion, the Tribunal dismissed the appeal filed by the revenue, stating that there were no questions of law, let alone substantial questions of law, arising for consideration in this case. Consequently, the appeal was dismissed.