Case: Hapag Lloyd India Pvt. Ltd Vs. Principal Commissioner of Income-Tax

3. The facts necessary for the determination of this petition are as under:(a) The petitioner is a private limited company. It is successor of United Arab Shipping Agency India Company Pvt. Limited (UASAC), which amalgamated with the petitioner with effect from 1st April, 2019, pursuant an order by National Company Law Tribunal. The UASAC, the predecessor company, had distributed dividend of Rs.10,16,75,641/- to its holding company, United Arab Shipping Company Limited, a company incorporated under the laws of Kuwait. The UASAC paid Dividend Distributed Tax (DDT) at the rate of 16.91% (including surcharge and cess) aggregating to Rs.2,06,99,127/-. A return of income for Assessment Year 2016 – 2017 was filed by UASAC on 30th November, 2016. A revised return of income was filed on 23rd December, 2016.(b) In the original as well as revised return, the benefit of Article 10 of India – Kuwait DTAA was, however, not claimed. Under the said article, the dividend distributed during the Financial Year 2015 – 2016, was taxable at the rate of 10%. The petitioner was, thus, entitled to refund of Rs.84,61,650/- being the excess tax paid. The petitioner thus preferred an application under Section 264 of the Act before respondent no.1.(c) By the impugned order respondent no.1 was persuaded to reject the application as untenable primarily on the ground that the UASAC had not made a claim of return of excess DDT at the time of filing original return of income as well as the revised return of income. Consequently, the assessment order under Section 143(3) of the Act, 1961 was passed on 18th December, 2018. Thus, there was no apparent error on the record in the said Assessment Order which warranted exercise of jurisdiction under Section 264 of the Act, 1961.4. The petitioner has invoked the writ jurisdiction on the ground that respondent no.1 has completely misconstrued the scope of jurisdiction under Section 264 of the Act, 1961. This incorrect approach of respondent no.1 has resulted in unjustified refusal to exercise the jurisdiction vested in him by Section 264 of the Act, 1961. Thus, the impugned order be set aside and the matter be remitted back to respondent no.1 for determination on merits.

Court's reasoning:
10. From the perusal of the aforesaid reasons, it becomes evident that two factors weighed with respondent no.1. First, the assessee had not claimed refund in the original and revised return and, thus, there was no error in the assessment order passed under Section 143(3) on 18th December, 2018. Second, respondent no.1 was of the view that the jurisdiction under Section 264 was confined to correct the order which is found to be apparently erroneous.11. Respondent no.1 was justified in recording that the assessee had not claimed refund of excess tax paid by it in the original and revised return. However, respondent no.1 committed an error in constricting the scope of revisional jurisdiction, in the backdrop of the said undisputed factual position. In fact, the very foundation of the application under Section 264 of the Act, 1961 was that the assessee had inadvertently failed to claim the benefit of Article 10 of the India – Kuwait DTAA, under which the dividend distribution was taxed at a lower rate. We are of the view that the approach of respondent no.1 in refusing to exercise the jurisdiction under Section 264 of the Act, 1961 on the premise that it can be lawfully exercised only where such a refund was claimed and considered by the Assessing Officer is neither borne out by the text of Section 264 of the Act, 1961 nor the construction put thereon by the precedents.12. The aforesaid reasoning indicates that respondent no.1 failed to appreciate the distinction between revisional and review jurisdiction. The principles which govern the exercise of review were sought to be unjustifiably imported to the exercise of power under Section 264 of the Act, 1961 and thereby imposing limitations which do not exist on exercise of such power. Undoubtedly, revisional jurisdiction is not as wide as an appellate jurisdiction. At the same time, revisional jurisdiction cannot be confused with the power of review, which by its very nature is limited.13. Mr. Thakkar was justified in placing reliance on a Division Bench Judgment of this Court in the case of Geekay Security Services (P) Ltd. vs. Deputy Commissioner of Income Tax, Circle3(1)(2) ([2019 101 taxmann.com 192 (Bombay)) wherein the Division Bench considered an identical question as to whether the revisional authority was justified in rejecting the revision application solely on the ground that the applicant had not claimed the benefit in the original return. After adverting to the previous pronouncements of various High Courts, this concurred with the view that Section 264 does not limit the power to correct errors committed by the sub-ordinate authorities and could even be exercised where errors are committed by the assessee and there is nothing in Section 264 which places any restriction on the Commissioners revisional power to give relief to the assessee in a case where assessee detects mistakes after the assessment is completed.14. The aforesaid pronouncement is on all four with the facts of the case at hand.