High Court intervenes to allow revision despite pending appeal, directs reassessment of deduction claim for defunct business.

H.A. Mohammed Haneef Versus ITO, Quilon

H.A. Mohammed Haneef Versus ITO, Quilon - 1973 KLJ 219 Issues:
1. Allowability of interest paid on amounts borrowed for defunct business as a deduction in computing total income.
2. Maintainability of revision before the Commissioner of Income Tax due to pendency of appeal before the Appellate Tribunal.
3. Interpretation of Section 264(4) of the Income Tax Act regarding revision of orders.

Analysis:
1. The petitioner, an assessee in the tea and cashew nut business, claimed a deduction for interest paid on amounts borrowed for the defunct cashew nut business for the assessment year 1961-62. The claim was disallowed by the Income Tax authorities based on previous decisions. The petitioner sought to challenge this disallowance through a revision before the Commissioner of Income Tax. However, the Commissioner dismissed the revision citing Section 264(4)(c) of the Income Tax Act, which prohibits revision if the order has been subject to an appeal before the Appellate Tribunal. The petitioner approached the High Court through a writ petition to challenge the dismissal of the revision and sought relief for the deduction claimed.

2. The Court considered the Madras High Court decision in a similar case under the Indian Income Tax Act, 1922, and agreed with the interpretation of the provision. The Court noted a distinction in the present case where the appeal before the Appellate Tribunal was filed by one party, while the revision before the Commissioner was filed by the opposite party. Despite the different parties and points raised in the appeal and revision, the Court held that the prohibition under Section 264(4)(c) applied to prevent the revision from being entertained due to the pendency of an appeal before the Appellate Tribunal. The Court emphasized that the prohibition was against the exercise of revisional jurisdiction by the Commissioner in such cases.

3. The Court acknowledged the wide jurisdiction under Article 226 of the Constitution and the discretionary power to grant relief. Considering that the petitioner did not file an appeal before the Appellate Tribunal due to pending decisions and the subsequent dismissal of the revision by the Commissioner, the Court found it appropriate to intervene and direct the Appellate Assistant Commissioner to reconsider the petitioner's claim for deduction in light of the Court's decision. The Court quashed the previous order and instructed a fresh consideration of the deduction claim by the Appellate Assistant Commissioner, ensuring the petitioner's right to seek relief was upheld through the appropriate statutory process.