My return was accepted as filed and no demand was raised. Is a s.264 revision still open to me?
Yes. An intimation under s.143(1) that simply accepts the return is still an order capable of revision, and 'prejudicial to the interest of the assessee' does not mean 'raised a demand'. The prejudice was that the assessee had paid more than the applicable treaty provisions required, even though the tax computed in the intimation was unchanged.
Decided by the High Court (Delhi High Court — Dr. S. Muralidhar and Talwant Singh JJ) on 2019-07-10, reported as [2019] 107 taxmann.com 227 (Delhi); [2019] 266 Taxman 23 (Delhi); 2019 SCC OnLine Del 9113; Writ Petition (Civil) No. 10417 of 2018. It bears on section 264, section 143(1), section 115A, section 90 of the Income Tax Act 1961, in Refunds, Interest & Condonation and Revision & Rectification matters.
It answers the objection that there is nothing to revise where the intimation raised no extra tax — which is the position in every case where the error is the taxpayer's own, sitting in the return as filed. On a nil-demand intimation an appeal gets nowhere, so s.264 is the only realistic remedy for a wrong rate or a wrong provision applied by the assessee, and this decision keeps that door open.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2014-15 the petitioner, a Spanish company later renamed TDK Electronics Components S.A., earned service fees of Rs 3,02,95,333 for management services provided to its Indian associated enterprise. It treated the receipt as fees for technical services, taxable at 25 per cent under s.115A and at 20 per cent under Article 13 of the India-Spain treaty, and paid at 20 per cent, together with surcharge of Rs 1,15,345 and education cess of Rs 1,76,478. The return was accepted by an intimation under s.143(1) dated 10 March 2016, so no further tax was payable. The petitioner then took the view that it had overlooked Clause 7 of the Protocol to the treaty, under which a lower rate conceded by India to another OECD member after 1 January 1990 would apply, and that the rate should have been 10 per cent; it also took the view that surcharge and cess were not separately payable. On 16 January 2017 it filed a revision petition under s.264 seeking rectification and refund. The Commissioner (International Taxation) rejected it on 22 March 2018, holding that nothing was payable under the intimation so no prejudice was caused, and that s.264 could not be used to correct the assessee's own mistake.
The petition was allowed. An intimation under s.143(1) accepting the return partakes of the character of an order for the purposes of s.264, so a revision petition against it is maintainable, and the Commissioner was wrong to hold otherwise (paras 14 to 17). On prejudice, the Court held that although the tax payable under the intimation was nil, prejudice was nonetheless caused: the department did not deny that the petitioner should have paid at 10 per cent, and the extra tax paid, though paid of its own volition, was prejudicial to it, so all the ingredients of s.264 were attracted (para 18). The Court also held that the Commissioner could not decline to follow the jurisdictional High Court's decision in Steria merely because an SLP had been filed, its operation not having been stayed (para 19), and that surcharge and cess were not separately payable once tax was paid at the treaty rate (para 20). It quashed the Commissioner's order and directed that the petitioner be permitted to rectify its return and pay at 10 per cent, with the excess tax, surcharge and cess refunded with interest within eight weeks (para 21). That relief rested on the most-favoured-nation reading of the Protocol, and it is that reading which the Supreme Court has since set aside.
On maintainability, the Revenue relied on the Supreme Court's decision in Rajesh Jhaveri Stock Brokers for the proposition that an intimation is not an order. The Court distinguished it: that decision was concerned with ss.147 and 148, where the consequences of a prior intimation differ from those of a s.143(3) assessment, whereas here there was no attempt to reopen anything — the context was an assessee correcting a mistake in its own return (paras 13 and 14). In that context the intimation partakes of the character of an order for the purposes of s.264. The Court followed its own decision in Vijay Gupta, which had answered precisely this question and had itself noticed Rajesh Jhaveri, and noted that at least three other High Court decisions cited in Vijay Gupta took the same view and that the Revenue appeared to have accepted them; whether an intimation is an order is a question with a limited context, and may carry a different connotation under ss.147 and 148 (paras 14 to 16). On prejudice, the Court refused to equate the absence of a demand with the absence of prejudice: the overpayment itself is the prejudice, and voluntariness does not cure it (para 18).
although the tax calculated as payable in the return filed and accepted by the Department by sending intimation under Section 143(1) of the Act is nil, it cannot be said that no prejudice is caused to the Assessee thereby
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Handle my notice → Ask a CA on WhatsAppYes. An intimation under s.143(1) that simply accepts the return is still an order capable of revision, and 'prejudicial to the interest of the assessee' does not mean 'raised a demand'. The prejudice was that the assessee had paid more than the applicable treaty provisions required, even though the tax computed in the intimation was unchanged. This was decided by the High Court (Delhi High Court — Dr. S. Muralidhar and Talwant Singh JJ) and bears on section 264, section 143(1), section 115A, section 90 of the Income Tax Act 1961. It is reported as [2019] 107 taxmann.com 227 (Delhi); [2019] 266 Taxman 23 (Delhi); 2019 SCC OnLine Del 9113; Writ Petition (Civil) No. 10417 of 2018. It answers the objection that there is nothing to revise where the intimation raised no extra tax — which is the position in every case where the error is the taxpayer's own, sitting in the return as filed. On a nil-demand intimation an appeal gets nowhere, so s.264 is the only realistic remedy for a wrong rate or a wrong provision applied by the assessee, and this decision keeps that door open. If it applies to you, the first step is this: Locate the prejudice in the excess actually paid and set it out in the application; the intimation itself will show nothing wrong, so pointing at it proves nothing.
For assessment year 2014-15 the petitioner, a Spanish company later renamed TDK Electronics Components S.A., earned service fees of Rs 3,02,95,333 for management services provided to its Indian associated enterprise. It treated the receipt as fees for technical services, taxable at 25 per cent under s.115A and at 20 per cent under Article 13 of the India-Spain treaty, and paid at 20 per cent, together with surcharge of Rs 1,15,345 and education cess of Rs 1,76,478. The return was accepted by an intimation under s.143(1) dated 10 March 2016, so no further tax was payable. The petitioner then took the view that it had overlooked Clause 7 of the Protocol to the treaty, under which a lower rate conceded by India to another OECD member after 1 January 1990 would apply, and that the rate should have been 10 per cent; it also took the view that surcharge and cess were not separately payable. On 16 January 2017 it filed a revision petition under s.264 seeking rectification and refund. The Commissioner (International Taxation) rejected it on 22 March 2018, holding that nothing was payable under the intimation so no prejudice was caused, and that s.264 could not be used to correct the assessee's own mistake. The matter was decided on 2019-07-10 by the High Court (Delhi High Court — Dr. S. Muralidhar and Talwant Singh JJ). On those facts the High Court held as follows. The petition was allowed. An intimation under s.143(1) accepting the return partakes of the character of an order for the purposes of s.264, so a revision petition against it is maintainable, and the Commissioner was wrong to hold otherwise (paras 14 to 17). On prejudice, the Court held that although the tax payable under the intimation was nil, prejudice was nonetheless caused: the department did not deny that the petitioner should have paid at 10 per cent, and the extra tax paid, though paid of its own volition, was prejudicial to it, so all the ingredients of s.264 were attracted (para 18). The Court also held that the Commissioner could not decline to follow the jurisdictional High Court's decision in Steria merely because an SLP had been filed, its operation not having been stayed (para 19), and that surcharge and cess were not separately payable once tax was paid at the treaty rate (para 20). It quashed the Commissioner's order and directed that the petitioner be permitted to rectify its return and pay at 10 per cent, with the excess tax, surcharge and cess refunded with interest within eight weeks (para 21). That relief rested on the most-favoured-nation reading of the Protocol, and it is that reading which the Supreme Court has since set aside.
On maintainability, the Revenue relied on the Supreme Court's decision in Rajesh Jhaveri Stock Brokers for the proposition that an intimation is not an order. The Court distinguished it: that decision was concerned with ss.147 and 148, where the consequences of a prior intimation differ from those of a s.143(3) assessment, whereas here there was no attempt to reopen anything — the context was an assessee correcting a mistake in its own return (paras 13 and 14). In that context the intimation partakes of the character of an order for the purposes of s.264. The Court followed its own decision in Vijay Gupta, which had answered precisely this question and had itself noticed Rajesh Jhaveri, and noted that at least three other High Court decisions cited in Vijay Gupta took the same view and that the Revenue appeared to have accepted them; whether an intimation is an order is a question with a limited context, and may carry a different connotation under ss.147 and 148 (paras 14 to 16). On prejudice, the Court refused to equate the absence of a demand with the absence of prejudice: the overpayment itself is the prejudice, and voluntariness does not cure it (para 18). In the words reproduced by the source cited on this page: "although the tax calculated as payable in the return filed and accepted by the Department by sending intimation under Section 143(1) of the Act is nil, it cannot be said that no prejudice is caused to the Assessee thereby" The decision followed or applied Vijay Gupta v. CIT [2016] 386 ITR 643 (Delhi); Steria (India) Ltd. v. CIT [2016] 386 ITR 390 (Delhi).
It was decided by the High Court on 2019-07-10 and is reported as [2019] 107 taxmann.com 227 (Delhi); [2019] 266 Taxman 23 (Delhi); 2019 SCC OnLine Del 9113; Writ Petition (Civil) No. 10417 of 2018. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 264, section 143(1), section 115A, section 90, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The petition was allowed. An intimation under s.143(1) accepting the return partakes of the character of an order for the purposes of s.264, so a revision petition against it is maintainable, and the Commissioner was wrong to hold otherwise (paras 14 to 17). On prejudice, the Court held that although the tax payable under the intimation was nil, prejudice was nonetheless caused: the department did not deny that the petitioner should have paid at 10 per cent, and the extra tax paid, though paid of its own volition, was prejudicial to it, so all the ingredients of s.264 were attracted (para 18). The Court also held that the Commissioner could not decline to follow the jurisdictional High Court's decision in Steria merely because an SLP had been filed, its operation not having been stayed (para 19), and that surcharge and cess were not separately payable once tax was paid at the treaty rate (para 20). It quashed the Commissioner's order and directed that the petitioner be permitted to rectify its return and pay at 10 per cent, with the excess tax, surcharge and cess refunded with interest within eight weeks (para 21). That relief rested on the most-favoured-nation reading of the Protocol, and it is that reading which the Supreme Court has since set aside. It arises in Refunds, Interest & Condonation and Revision & Rectification matters, on section 264, section 143(1), section 115A, section 90 of the Income Tax Act 1961, and was decided by Delhi High Court — Dr. S. Muralidhar and Talwant Singh JJ. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Identify the specific provision that should have been applied and quantify the rate difference with a computation. Do not accept the argument that a nil-demand intimation is not an order — the intimation is revisable under s.264.
Overruled. Set aside by the Supreme Court. This judgment was one of the Delhi High Court decisions in the batch decided in Assessing Officer (International Taxation) v. Nestle SA, Civil Appeals Nos. 1420 to 1432 of 2023, decided 19 October 2023, reported at [2023] 155 taxmann.com 384 / [2023] 458 ITR 756 / [2024] 296 Taxman 580 (SC). The Court there held that a notification under s.90(1) is a necessary and mandatory condition before a court, authority or tribunal may give effect to a DTAA or to a protocol changing its terms where that alters existing law; that a most-favoured-nation stipulation does not automatically import a later treaty's rate or scope; and that the third state must have been an OECD member when it entered its treaty with India. It concluded that the reasoning and findings in the impugned orders could not survive and set them aside, and its case review names this judgment among them, alongside Steria (India) Ltd., Concentrix Services Netherlands B.V., Cotecna Inspection SA, Golderme Pharma SA and the earlier Nestle SA writ decision. The Nestle judgment itself has been affirmed on review, [2024] 165 taxmann.com 334 (SC). The Supreme Court did not consider s.264, the character of an intimation under s.143(1), or the meaning of 'prejudicial to the interests of the assessee'; but it set this judgment aside rather than confining its order to the MFN limb, so the s.264 proposition can no longer be sourced to this decision. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This judgment no longer stands. It was set aside by the Supreme Court on 19 October 2023 in the Nestle batch, whose case review names it. The Supreme Court decided only the most-favoured-nation question and said nothing about s.264, but its order set aside the impugned judgments rather than any particular limb of them, so nothing in this decision should now be cited as authority. The point the entry was written for — that an intimation under s.143(1) accepting a return is an order revisable under s.264, and that prejudice can lie in the assessee having overpaid even where the intimation computed nothing further — is itself sourced elsewhere: this Court was following its own earlier decision in Vijay Gupta and the Kerala, Gauhati and Gujarat decisions cited in it, and those are unaffected by Nestle. Note also that the petitioner is now TDK Electronics Components S.A. and its Indian associate TDK India Private Limited; the cause title was never amended. The Supreme Court did not address the s.264 limb of this judgment, so whether that reasoning would be approved if it came up squarely is not decided by anything read here. The DTR and CTR citations previously recorded for this case could not be confirmed against the judgment. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The petition was allowed. An intimation under s.143(1) accepting the return partakes of the character of an order for the purposes of s.264, so a revision petition against it is maintainable, and the Commissioner was wrong to hold otherwise (paras 14 to 17). On prejudice, the Court held that although the tax payable under the intimation was nil, prejudice was nonetheless caused: the department did not deny that the petitioner should have paid at 10 per cent, and the extra tax paid, though paid of its own volition, was prejudicial to it, so all the ingredients of s.264 were attracted (para 18). The Court also held that the Commissioner could not decline to follow the jurisdictional High Court's decision in Steria merely because an SLP had been filed, its operation not having been stayed (para 19), and that surcharge and cess were not separately payable once tax was paid at the treaty rate (para 20). It quashed the Commissioner's order and directed that the petitioner be permitted to rectify its return and pay at 10 per cent, with the excess tax, surcharge and cess refunded with interest within eight weeks (para 21). That relief rested on the most-favoured-nation reading of the Protocol, and it is that reading which the Supreme Court has since set aside.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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