THE PRINCIPAL COMMISSIONER OF INCOME TAX V. QUEST GLOBAL ENGINEERING SERVICES PRIVATE LIMITED

RP/100017/2023

AI Insights

The case involves a review petition filed by the Principal Commissioner of Income Tax, Hubli, against Quest Global Engineering Services Private Limited, concerning a previous order that allowed the writ petition on the grounds of limitation under Section 263(2) of the Income Tax Act. The original dispute centered on the invocation of revisional powers under Section 263 by the Principal Commissioner, which was challenged by the respondent on the basis that the notice was barred by limitation. The court had to determine whether the limitation period was applicable as per Section 263(2) or if Section 263(3) applied due to a remand by the Income Tax Appellate Tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 719796 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 11-06-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: T SURYANARAYANA
• Assessee Lawyers: THIRUMALESH
• Keywords: Arms' length price; Income Tax; Limitation; Revision petition; Transfer pricing
• Section: 263; 114; 47; 263(1); 263(2); 263(3)

Judgement Text

" - 1 - NC: 2024:KHC-D:7784 RP No. 100017 of 2023 IN WP No.101642 of 2023 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 11TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR.JUSTICE M.I.ARUN REVIEW PETITION NO.100017 OF 2023 IN WRIT PETITION NO.101642 OF 2023 BETWEEN: 1. THE PRINCIPAL COMMISSIONER OF INCOME TAX HUBLI, C.R. BUILDING NAVANAGAR, HUBALI-580 025. …PETITIONER (BY SRI THIRUMALESH M., ADVOCATE FOR SRI Y.V. RAVIRAJ, ADVOCATE) AND: 1. QUEST GLOBAL ENGINEERING SERVICES PRIVATE LIMITED AEQUS SPECIAL ECONOMIC ZONE NO.437/A, PLOT NO.2 THANA HATTARGU S.O. HUKKERI BELGAUM-591 243 REPRESENTED HEREIN BY ITS GENERAL MANAGER. …RESPONDENT (BY SRI T. SURYANARAYANA, SENIOR ADVOCATE FOR SRI NANDISH PATIL AND SMT. MANASA A., ADVOCATES) Digitally signed by V MANJUSHA BAI Location: High Court of Karnataka - 2 - NC: 2024:KHC-D:7784 RP No. 100017 of 2023 IN WP No.101642 of 2023 THIS PETITION IS FILED UNDER SECTION 114 AND ORDER XXXXVII RULE 1 OF CPC READ WITH ARTICLE 226 OF CONSTITUTION OF INDIA, PRAYING TO CALL FOR RECORDS IN W.P.NO.101642/2023 AND ON PERUSAL OF THE SAME BE PLEASED TO REVIEW THE ORDER DATED 29.03.23 PASSED BY THE HIGH COURT OF KARNATAKA AT DHARWAD AND ACCORDINGLY HEAR THE WRIT PETITION NO.101642/2023 AND PASS APPROPRIATE ORDERS IN THE INTEREST OF JUSTICE AND EQUITY, ETC. THIS PETITION COMING ON FOR ADMISSION, THROUGH PHYSICAL HEARING/VIDEO CONFERENCING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER 1. Aggrieved by the order dated 29.03.2023 passed by this Court in W.P.No.101642/2023, the respondent therein has preferred this revision petition. 2. The jurisdictional Transfer Pricing Officer passed an order dated 31.03.2017 determining the Arms length price. The said order was perceived as beneficial to the assessee and adverse to the interest of revenue. Hence, revisional powers under Section 263 of the Income Tax Act (for short 'the Act') was invoked by the jurisdictional Principal Commissioner and he issued a notice on 01.02.2023 to the assessee. On the ground that the said - 3 - NC: 2024:KHC-D:7784 RP No. 100017 of 2023 IN WP No.101642 of 2023 notice is barred by limitation, as it was not issued within two years from the date of passing of the order under challenge, the writ petition was allowed in favour of the respondent herein (assessee). Section 263(2) of the Act prescribes about the limitation being two years. 3. The case of the revenue is that, in the instant case, there was a remand made by the Income Tax Appellate Tribunal to the Transfer Pricing Officer to consider the case of the assessee afresh and in pursuance of the same, the Transfer Pricing Officer has passed an order dated 31.03.2017 and under that circumstance, the limitation prescribed under Section 263(2) of the Act does not apply and Section 263(3) of the Act has to be considered. 4. Section 263(1), (2) and (3) of the Act reads as under: \"Revision of orders prejudicial to revenue. 263.(1) The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed - 4 - NC: 2024:KHC-D:7784 RP No. 100017 of 2023 IN WP No.101642 of 2023 therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, (National Tax Tribunal,) the High Court or the Supreme Court. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx \" 5. A reading of the aforementioned provisions clarifies that only when there is a remand or a direction issued to the revisional authority, who is exercising the power under Section 263 of the Act, by the Appellate Tribunal (National Tax Tribunal), the High Court or the Supreme Court, Section 263(3) of the Act applies and not otherwise. - 5 - NC: 2024:KHC-D:7784 RP No. 100017 of 2023 IN WP No.101642 of 2023 6. In the instant case, admittedly, there is a remand made by the Income Tax Appellate Tribunal to the Transfer Pricing Officer and not to the Principal Commissioner. The Transfer Pricing Officer pursuant to the direction has passed the order. In any event, if the revenue is desirous of revising the said order under Section 263 of the Act, the limitation prescribed under Section 263(2) of the Act applies and not Section 263(3) of the Act as contended by the petitioner herein. 7. For the aforementioned reasons, I do not find any error apparent on the face of the record in the order passed in W.P.No.101642/2023. The review petition is hereby dismissed. Sd/- JUDGE hkh. "