Commissioner must follow binding jurisdictional High Court precedent despite pendency before Supreme Court; revision under section 264 allowable

Shangri-La International Hotel Management Pte. Ltd. v. Commissioner of Income-tax (International Tax)
[2025]  (Delhi High Court)

Facts of the case
The assessee filed its return of income for Assessment Year 2021–22, which was processed and an intimation dated 28.04.2022 was issued under section 143(1) of the Income-tax Act, 1961. Aggrieved by the adjustment made in the intimation, the assessee preferred a revision application under section 264 before the Commissioner of Income-tax, seeking revision of the intimation along with consequential refund and interest under section 244A.

Stand of the Revenue
The Revenue did not dispute the maintainability of the revision petition under section 264. It was acknowledged that, in view of the judgments of the Delhi High Court in Vijay Gupta v. CIT and EPCOS Electronic Components S.A. v. Union of India, a revision against an intimation issued under section 143(1) was permissible. However, the Commissioner declined to grant relief on merits solely on the ground that the judgment of the jurisdictional High Court in CIT v. Sheraton International Inc., which covered the issue in favour of the assessee, was pending consideration before the Supreme Court.

Issue before the High Court
Whether the Commissioner was justified in refusing to grant relief under section 264 by ignoring a binding judgment of the jurisdictional High Court merely because a special leave petition against that judgment was pending before the Supreme Court.

Decision of the High Court
The Delhi High Court held that the approach adopted by the Commissioner was legally unsustainable. It was reiterated that a judgment of the jurisdictional High Court is binding on all authorities functioning within its territorial jurisdiction. The mere pendency of a special leave petition or appeal before the Supreme Court does not dilute or suspend the binding nature of such a judgment unless it is stayed or set aside by the Supreme Court.

The Court observed that the issue involved had already been conclusively decided in favour of the assessee in Sheraton International Inc. and the said position had been reaffirmed in subsequent judgments, including in the assessee’s own earlier cases. In such circumstances, the Commissioner was duty-bound to follow the binding precedent and could not deny relief on the pretext that the matter was pending before the Supreme Court.

Conclusion and directions
The High Court set aside the order passed by the Commissioner under section 264. The assessee’s revision application was allowed, and the Commissioner was directed to grant consequential relief in accordance with law, including refund and applicable interest under section 244A.

Key principle laid down
A binding precedent of the jurisdictional High Court must be followed by tax authorities, and relief cannot be denied merely because the issue is pending before the Supreme Court. Revision under section 264 against an intimation under section 143(1) is maintainable, and the Commissioner is obligated to decide such revision in conformity with binding judicial precedents.