Commissioner bound by statute, cannot revise pending Tribunal appeal. Statutory provisions prevail over administrative directives.

The court held that the Commissioner was bound by Section 264(4)(c) of the Income-tax Act and could not entertain a revision petition while an appeal was pending before the Tribunal, rejecting the argument that an inter-departmental circular could alter this restriction. Emphasizing that statutory provisions prevail over administrative directives, the judge dismissed the writ petition challenging the rejection of the revision petition, affirming the Commissioner's decision as legally sound.

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Issues:
1. Interpretation of Section 264(4)(c) of the Income-tax Act, 1961 regarding the maintainability of a revision petition.
2. Consideration of the impact of an inter-departmental circular on the interpretation of statutory provisions.
3. Examination of judicial precedents related to the subject matter of an appeal and the revisional powers of the Commissioner.

Analysis:
The case involved a writ petition seeking to quash the decision of the first respondent to reject a revision petition under Section 264 of the Income-tax Act, 1961. The petitioner, a foreign joint stock company, had entered into collaboration agreements with an Indian company for the manufacture of textile machinery. The dispute arose regarding the taxation of royalty payments received under these agreements. The Income-tax Officer included certain amounts for assessment, leading to an appeal before the Commissioner of Income-tax (Appeals) and subsequently to the Income-tax Appellate Tribunal.

The central issue revolved around the interpretation of Section 264(4)(c) of the Income-tax Act, which prohibits the Commissioner from revising an order that is the subject of an appeal to the Commissioner of Income-tax (Appeals) or the Appellate Tribunal. The petitioner argued that a circular issued by the Board clarified that the Commissioner's jurisdiction to entertain a revision petition should be barred only if an appeal was preferred by the assessee before the Tribunal, not by the Department. However, the first respondent rejected the revision petition on the grounds that it was not maintainable due to the appeal filed with the Commissioner of Income-tax (Appeals).

The judge analyzed the legal provisions and relevant judicial precedents, including the decision in C. Gnanasundara Nayagar v. CIT and CWT v. Mrs. Kasturbai Walchand, to determine the scope of the appeal and the Commissioner's revisional powers. The judge emphasized that the subject of an appeal refers to an effective appeal disposed of on the merits, irrespective of who filed the appeal. The judge dismissed the argument that an inter-departmental circular could alter the statutory restriction on the Commissioner's revisional jurisdiction. It was held that the circular could not guide the interpretation of statutory provisions and that the Commissioner's powers were restricted by the appeal filed, regardless of the appellant.

Ultimately, the judge concluded that the Commissioner was bound by the statutory provision of Section 264(4)(c) and could not entertain the revision petition due to the pending appeal before the Tribunal. The judge emphasized that administrative circulars could not override statutory restrictions and that the Commissioner's quasi-judicial powers were not subject to administrative directives. Consequently, the writ petition was dismissed, citing no error of law in the Commissioner's decision.

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