2024 (7) TMI 1058 - HC - Income Tax

Revision u/s 263 - Deduction u/s 80IC - principles of merger, judicial discipline and res-judicata - self-assessment made by respondent was rejected and it was re-opened in terms of Section 147 - deduction claimed by respondent was reduced from 100% to 30% - HELD THAT - Principal Commissioner has power to revise an order if he finds that order passed Assessing Officer is prejudicial to the interest of Revenue. In the case in hand, the AO had not extended deduction @ 100% whereas AO had rejected claim of assessee and reduced deduction from 100% to 30%. The said order merged with the order of Commissioner (A) and order of Commissioner (A) further merged with the order of Tribunal. The common thread running through order of AO, Commissioner (A) and Tribunal was whether assessee is entitled to deduction @ 100% or @ 30% u/s 80IC Tribunal categorically held that assessee is entitled to deduction @ 100%. The Principal Commissioner while exercising its power under Section 263 concluded that assessee was not entitled to deduction @ 100%. The ground to reduce the deduction may be different but it cannot be ignored that Assessing Officer had reduced deduction from 100% to 30%, thus, issue before the authorities was confined to entitlement of deduction. The Appellate Tribunal settled the matter in favour of the assessee. The act of Principal Commissioner amounted to revision of order of Appellate Tribunal. The Principal Commissioner had no jurisdiction to revise order of Appellate Tribunal. Act of Principal Commissioner was contrary principles of merger, judicial discipline and res-judicata. If an authority is permitted to revise an order which had already merged with the order of Higher Authorities, there would be chaos and no end of litigation. Every litigation at one or another stage must be put to rest.

Summary

Issues:
1. Interpretation of Section 80IC of the Income Tax Act, 1961 - entitlement to deduction @ 100% or @ 30%.
2. Jurisdiction of the Principal Commissioner under Section 263 to revise an assessment order.
3. Application of principles of merger, judicial discipline, and res judicata in revising orders.

Detailed Analysis:

Issue 1: The primary issue in this case revolved around the interpretation of Section 80IC of the Income Tax Act, 1961, determining whether the respondent was entitled to a deduction at the rate of 100% or 30%. The respondent had claimed a deduction of Rs. 5,87,89,770 under Section 80IC for the assessment year 2013-14. The Assessing Officer initially reduced this deduction to Rs. 1,76,36,931, citing that the respondent was only eligible for a 30% deduction. The Commissioner (A) upheld this decision, but the Tribunal later allowed the respondent's appeal, stating that the respondent was entitled to a deduction at the rate of 100%.

Issue 2: The second issue involved the jurisdiction of the Principal Commissioner under Section 263 to revise an assessment order. The Principal Commissioner, after the Tribunal's decision, formed an opinion that the respondent had wrongly claimed a deduction at 100% and initiated proceedings under Section 263. The Principal Commissioner directed the Assessing Officer to modify the assessment order, reducing the deduction claimed by the respondent. However, the Tribunal set aside the Principal Commissioner's order, stating that the Assessing Officer's order had already merged with the Tribunal's order, and the Principal Commissioner had no jurisdiction to revise the Tribunal's decision.

Issue 3: The application of principles of merger, judicial discipline, and res judicata played a crucial role in determining the outcome of the case. The Tribunal's decision in favor of the respondent settled the matter regarding the entitlement to deduction under Section 80IC. The Tribunal's decision merged with the Assessing Officer's order and the Commissioner (A)'s order. The Principal Commissioner's attempt to revise the Tribunal's decision was deemed contrary to the principles of merger and judicial discipline, leading to the dismissal of the appeals.

In conclusion, the High Court dismissed the appeals, emphasizing that the Tribunal's decision in favor of the respondent settled the issue of entitlement to deduction under Section 80IC. The attempt by the Principal Commissioner to revise the Tribunal's decision was considered improper, highlighting the importance of respecting the principles of merger, judicial discipline, and res judicata to bring an end to ongoing litigation.