2019 (2) TMI 1143 - HC - Income Tax

Commissioner lacks authority to entertain revision application due to Settlement Commission's exclusive jurisdiction. Order dismissal justified.

Mandhana Industries Ltd. Versus Principal Commissioner of Income Tax (Central) 1 & Anr.

The court dismissed the petition, ruling that the Commissioner lacked the authority to entertain the revision application. It emphasized the Settlement ... Revision of settlement commission order - Time Limit for application under Section 264 - taxability of the subsidy - HELD THAT:- Though the petitioner may have worded the prayer before the Commissioner differently, to grant the prayer of the petitioner would require the Commissioner to travel beyond the order of Settlement Commission which as held by us he could not do. His mere expression that he cannot revise the order of the Settlement Commission, therefore, would not be fatal to the order. Secondly, the writ jurisdiction of the High Court cannot be put in such a straight jacket. High Court is not bound by the reasons sited by the Commissioner. If it is found that the Commissioner has no authority to grant prayer made in the revision petition filed before him, the Court would not ask him to do so merely because he has sited reasons which may not appear to be sound. Thirdly the petitioner would not be satisfied with mere quashing of the order of the Commissioner. The petitioner in order to succeed would require substantive relief. The petitioner after praying for quashing the revisional order of the Commissioner has further prayed that this Hon’ble Court may be pleased to issue a Writ of Mandamus and / or any other appropriate writ order or direction under Article 226 of the Constitution of India directing the respondents to treat the subsidy received under the said scheme as being capital in nature, not eligible to tax, issue the refund of ₹ 24.01 crore with interest in accordance with law and accordingly, allow the revision application. When we find that this prayer could not have been granted by the Commissioner, even if the ground of rejection of the revision petition by the Commissioner may not be entirely convincing, quashing the order of the Commissioner would be issuing a futile writ. We do not understand which order the petitioner seeks revision of. It could not have been the order of Settlement Commission which is clearly the stand of the petitioner, though while explaining delay, the petitioner has taken the order of the Settlement Commission as the starting point for computing delay. If the petitioner seeks revision of the order passed by the Assessing Officer giving effect to the order of Settlement Commission as held by us, such order was not erroneous giving rise to a revisable order. If the petitioner wanted to argue that the benefit should have been given by the Commissioner revising the original assessment (completely ignoring the settlement proceedings), the revision petition was delayed by several years and not 270 odd days as contended by the petitioner. Perhaps conscious of these difficulties, the petitioner in the revision petition has not challenged any specific order. We wonder if in a provision under Section 264 of the Act, the petitioner can seek relief from the Commissioner without seeking revision of any order. Petition dismissed. Issues Involved:1. Rejection of the revision application under Section 264 of the Income Tax Act, 1961.2. Taxability of the subsidy received under the Technology Upgradation Fund Scheme (TUF Scheme).3. Jurisdiction of the Commissioner of Income Tax to revise the order passed by the Assessing Officer following the Settlement Commission's order.4. Delay in filing the revision petition.Detailed Analysis:1. Rejection of the Revision Application under Section 264:The petitioner, a public limited company, challenged the order dated 28.2.2018 by the Principal Commissioner of Income Tax, rejecting the revision application filed under Section 264 of the Income Tax Act, 1961. The Commissioner dismissed the revision petition on three grounds:- Failure to explain the delay in filing the revision petition.- Lack of power to revise the order of the Settlement Commission.- Incorrectness of the petitioner's claim that the subsidy was a capital receipt and not taxable.2. Taxability of the Subsidy Received under the TUF Scheme:The petitioner received reimbursement of interest expenses under the TUF Scheme for modernization or expansion of its textile units. The petitioner argued that the subsidy was a capital receipt and not taxable. Despite this, the subsidy was offered to tax during the relevant assessment years. The Commissioner, however, held that the subsidy was taxable as revenue receipt.3. Jurisdiction of the Commissioner to Revise the Order:The petitioner contended that the Commissioner had jurisdiction to revise the order passed by the Assessing Officer after the Settlement Commission's order. The petitioner argued that the Settlement Commission's order is conclusive only on the issues decided by it, and the Commissioner could entertain new grounds not adjudicated by the Settlement Commission. However, the court held that the Settlement Commission has exclusive jurisdiction over the case once an application for settlement is filed and allowed to proceed. The Assessing Officer's role was limited to giving effect to the Settlement Commission's directives, and the Commissioner could not revise the Settlement Commission's order or the subsequent orders of the Assessing Officer.4. Delay in Filing the Revision Petition:The petitioner explained the delay by stating that the amendment to Section 2(24) of the Act, clarifying the taxability of government subsidies, came into effect on 14 May 2015. The petitioner argued that the time limit for filing the revision petition should be considered from this date. The Commissioner, however, held that the petitioner failed to show sufficient cause for the delay, whether computed from the date of the Settlement Commission's order or the date of the assessment orders.Conclusion:The court dismissed the petition, concluding that the Commissioner had no power to entertain the revision petition in the present facts and circumstances. The court emphasized that the Settlement Commission has exclusive jurisdiction over the case once an application for settlement is filed and allowed to proceed, and the Assessing Officer's role is limited to implementing the Settlement Commission's directives. The court also noted that the petitioner did not specify which order it sought to revise and failed to provide sufficient cause for the delay in filing the revision petition.