Facts of the Case

The petitioner, InterGlobe Enterprises Private Limited, filed its return for Assessment Year 2014-15, including a sum of ₹1,51,67,868/- as interest income received on income tax refunds pertaining to AY 2009-10 and AY 2010-11, and paid tax on the same.

Subsequently, the Revenue reopened the assessment for AY 2012-13 under Section 148 of the Income Tax Act, 1961, on the ground that the said interest income was actually received during the previous year relevant to AY 2012-13 and therefore taxable in that year.

The Assessing Officer added the same amount again in AY 2012-13 but failed to exclude it from AY 2014-15, resulting in double taxation of the same income.

The petitioner accepted taxation in AY 2012-13 under the Direct Tax Vivad Se Vishwas Act, 2020, and thereafter filed a revision application under Section 264 seeking relief for AY 2014-15. However, the application was rejected by the Commissioner.

Issues Involved

  1. Whether the same income (interest on income tax refund) can be taxed in two different assessment years.
  2. Whether the Commissioner was justified in rejecting the revision application under Section 264 of the Income Tax Act, 1961.
  3. Scope and extent of powers under Section 264—whether it includes correcting errors committed by the assessee.

Petitioner’s Arguments

  • The interest income had already been taxed in AY 2014-15; therefore, taxing it again in AY 2012-13 leads to impermissible double taxation.
  • Once the Revenue chose to tax the income in AY 2012-13, it was mandatory to exclude it from AY 2014-15.
  • The rejection of the application under Section 264 was erroneous since the issue clearly formed part of the assessment order under Section 143(3).
  • The Commissioner has wide revisional powers and must grant relief where tax has been wrongly paid.

Respondent’s Arguments

  • The Revenue contended that the issue raised by the petitioner did not form part of the assessment order under Section 143(3).
  • It was argued that the application did not fall within the scope of Section 264, and hence was rightly rejected.

Court’s Findings / Judgment

  • Double taxation is impermissible; the same income cannot be taxed twice in different assessment years.
  • Merely because an assessee offered income to tax does not make it taxable if it is otherwise not chargeable under law.
  • The powers under Section 264 are wide and extend to correcting errors committed by both the tax authorities and the assessee.
  • The Commissioner erred in rejecting the revision application on incorrect grounds.

Final Order

  • The impugned order dated 04.10.2021 was set aside.
  • The matter was remanded back to the Commissioner to pass a fresh order in accordance with law.
  • The writ petition was allowed.

Important Clarifications by Court

  • Income tax is payable only on legally chargeable income, not merely on amounts mistakenly offered.
  • Section 264 is a beneficial provision meant to ensure justice and prevent undue hardship.
  • Authorities are duty-bound to avoid double taxation and grant necessary relief/refund.

Sections Involved

  • Section 143(3) – Assessment
  • Section 148 – Reassessment
  • Section 264 – Revision by Commissioner
  • Section 246A – Appeal provisions
  • Direct Tax Vivad Se Vishwas Act, 2020

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/VIB20012023CW117082021_123731.pdf

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