2024 (1) TMI 752 - HC - Income Tax

Revision u/s 264 - seeking direction to re-consider the claim of the petitioner for deduction u/s 80-IA - difference between Section 263 and Section 264 - HELD THAT - Under Section 264 of the Act, the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may either of his own motion or on an application by the assessee for revision, call for the record of any proceeding relatable to an order other than an order to which Section 263 of the Act applies and after making due inquiry, he may pass such order thereon as he thinks fit; the only caveat being that such order should not be prejudicial to the assessee. Therefore, as we have noticed above, there is no limitation on the power of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner while invoking jurisdiction under Section 264 of the Act. It is not confined to legality or validity of an order passed by the assessing officer or a claim made and disallowed or a claim not put forth by the assessee. A Division Bench of the Bombay High Court in Geekay Security Services (P.) Ltd. ( 2018 (12) TMI 702 - BOMBAY HIGH COURT ) after referring to the Division Bench decision of the Gujarat High Court in Hitech Analytical Services 2017 (9) TMI 1412 - GUJARAT HIGH COURT and other decisions, Bombay High Court came to the conclusion that Principal Commissioner was not correct in refusing to exercise jurisdiction under Section 264 of the Act to examine the claim of the petitioner on merit. Therefore, the order of the Principal Commissioner was set aside and the matter was remanded back to the Principal Commissioner for a fresh consideration and decision on merit in accordance with law. That being the position and following the decision of the Bombay High Court in Geekay Security Services (P.) Ltd. (supra), we set aside the impugned order dated 28.03.2019 and remand the matter back to the file of the 3rd respondent for re-consideration of the revision application filed by the petitioner u/s 264 of the Act on merit after giving due opportunity of hearing to both the sides.

Summary

Issues Involved:
1. Legality and validity of the order dated 28.03.2019 under Section 264 of the Income Tax Act.
2. Entitlement of the petitioner to claim deduction under Section 80-IA of the Income Tax Act.
3. Jurisdiction and power of the Principal Commissioner under Section 264 of the Income Tax Act.

Summary:

Issue 1: Legality and Validity of the Order Dated 28.03.2019:
The petitioner challenged the legality and validity of the order dated 28.03.2019 passed by the Principal Commissioner of Income Tax-6, Hyderabad under Section 264 of the Income Tax Act, 1961. The petitioner sought a direction for reconsideration of their claim for deduction under Section 80-IA of the Act. The Principal Commissioner had condoned the delay in filing the revision application but declined to interfere with the assessing officer's decision, stating that the petitioner had chosen not to claim the deduction initially.

Issue 2: Entitlement to Claim Deduction under Section 80-IA:
The petitioner, a joint venture between two companies, filed its return of income for the assessment year 2014-15 without claiming the deduction under Section 80-IA due to a bona fide error. The petitioner later sought revision of the assessment order under Section 264, claiming entitlement to the deduction. The Principal Commissioner rejected this claim, emphasizing that the petitioner did not opt to make the deduction claim initially or in the subsequent assessment year.

Issue 3: Jurisdiction and Power under Section 264:
The court examined the scope of Section 264, which allows the Principal Commissioner to revise any order not covered by Section 263. The court noted that Section 264 does not limit the Principal Commissioner's power to legality or validity of the order, and it can address claims not initially made by the assessee. The court referenced the Bombay High Court decision in Geekay Security Services (P.) Ltd., which held that the Principal Commissioner should entertain claims on merit under Section 264.

Judgment:
The court concluded that the Principal Commissioner erred in refusing to entertain the petitioner's claim under Section 80-IA on merit. The decision of the Supreme Court in Goetze (India) Ltd. was distinguished as it pertained to the appellate power under Section 254, not the revisional power under Section 264. Consequently, the court set aside the impugned order dated 28.03.2019 and remanded the matter back to the Principal Commissioner for reconsideration of the revision application on merit, directing a fresh decision within two months. The writ petition was allowed with no order as to costs, and any pending miscellaneous applications were closed.