Section 264 revision and DTAA relief apply to a Section 143(1) intimation that causes prejudice through excess tax payment.

For the purpose of Section 264 of the Income-tax Act, an intimation under Section 143(1) can be treated as an order and is therefore revisable where it causes prejudice to the assessee. The Delhi HC followed its earlier jurisdictional view and held that the contrary reopening context under Sections 147 and 148 was not relevant. It further held that excess tax paid because the assessee was entitled to the lower DTAA rate, including the protocol benefit, constituted prejudice. On that basis, the assessee was entitled to rectification, application of the treaty rate, and refund of the excess tax, surcharge and cess with interest.

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Issues: (i) Whether a revision petition under Section 264 of the Income-tax Act, 1961 was maintainable against an intimation under Section 143(1) of the Income-tax Act, 1961; (ii) Whether the intimation was prejudicial to the assessee and entitled the assessee to rectification of the return, refund of excess tax, surcharge and cess, and application of the DTAA rate with the protocol benefit.

Issue (i): Whether a revision petition under Section 264 of the Income-tax Act, 1961 was maintainable against an intimation under Section 143(1) of the Income-tax Act, 1961.

Analysis: The intimation under Section 143(1) was held to partake the character of an order for the limited purpose of Section 264. The earlier view of the jurisdictional Court treating such intimation as revisable was followed, and the contrary reliance on the reopening context under Sections 147 and 148 was held inapposite.

Conclusion: The revision petition was maintainable.

Issue (ii): Whether the intimation was prejudicial to the assessee and entitled the assessee to rectification of the return, refund of excess tax, surcharge and cess, and application of the DTAA rate with the protocol benefit.

Analysis: The assessee had paid tax at a higher rate despite being entitled to the lower treaty rate. That excess payment constituted prejudice for the purpose of Section 264. The Court also held that the protocol to the DTAA formed part of the treaty, that the jurisdictional precedent on the point was binding, and that surcharge and cess were not separately payable once tax at the applicable treaty rate had been discharged.

Conclusion: The assessee was entitled to rectification, application of the 10% rate, and refund of the excess amount with interest.

Final Conclusion: The impugned order was quashed and the assessee obtained full relief on revision, treaty rate application, and refund of excess tax paid.

Ratio Decidendi: For the purpose of Section 264 of the Income-tax Act, 1961, an intimation under Section 143(1) can be treated as an order and is revisable where it causes prejudice to the assessee, including by resulting in excess tax payment contrary to the applicable treaty rate.

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