My client offered a superannuation fund receipt to tax for several years before realising it was exempt. His section 264 revision has been rejected as time-barred and the assessment years are closed. Is there anything left?
The Delhi High Court gave relief on exactly those facts. It upheld the Commissioner's rejection of the section 264 revision as barred by limitation, but held that the constraints felt by the Commissioner under section 264 do not impinge on the Court's powers under Article 226; that Article 265 mandates that no person shall be taxed without the authority of law; and that since there was no authority to tax the annuities the petitioner had received, it was appropriate to exercise the extraordinary jurisdiction to correct the injustice even though the injustice was of the assessee's own making.
Decided by the High Court (Vikramajit Sen J and S. Muralidhar J) on 2006-11-06, reported as (2007) 211 CTR (Del) 357, as printed on the report. It bears on section 10(13), section 10(13)(ii), section 264, section 17(2)(v), section 119 of the Income Tax Act 1961, in Salary & Perquisites, Capital Gains Exemptions and Revision & Rectification matters.
The value of this decision is procedural and it travels well beyond superannuation funds. Three propositions come out of it. First, a receipt which section 10 excludes from total income does not become chargeable because the assessee mistakenly returned it — the exclusion operates on the computation, not on the assessee's election. Second, an assessee who has lost his section 264 remedy on limitation is not necessarily without relief: the writ jurisdiction is not subject to the limitation in section 264, and Article 265 supplies the substantive ground. Third, the Court declined to let CIT v Shelly Products stand in the way, rejecting the Revenue's argument that the Department could not be faulted for accepting returns in which the assessee had himself offered the sum. Two limits should be stated plainly. The Court's reasoning rested partly on the fact that for one of the intervening years, 1992-93, the petitioner had already obtained relief up to the Tribunal and the Department had not assailed that decision — so this was not a case of an unresolved legal question but of an inconsistency the Department had accepted. And the clause the Court applied, s.10(13)(ii), exempts a payment from an approved superannuation fund made "in lieu of or in commutation of an annuity", whereas the payments in issue are described in the judgment as annuities or pension received from LIC; the Court did not analyse that distinction, and this decision should NOT be cited as authority that a periodic annuity or pension from a superannuation fund is exempt. Take from it the Article 226 and Article 265 propositions, not a general proposition about superannuation annuities.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner had received amounts from an approved superannuation fund, described in the petition as pension from LIC, and had offered them to tax in his returns for the assessment years 1989-90 to 1993-94 in the belief that they were chargeable. For assessment year 1992-93 he had already obtained relief up to the stage of the Tribunal, and that decision had not been assailed by the Department. For assessment years 1990-91, 1991-92 and 1993-94 he applied under section 264, and the Commissioner rejected the application by order dated 20 November 2002 on the ground that it was barred by limitation, holding additionally that for 1990-91 the revision could not be entertained because an appeal had been preferred. By writ petition under Article 226 the petitioner sought to quash that order, to have the delay condoned, to have the Assessing Officer directed to exclude the superannuation receipt from assessable income for the three years, and to have the Board issue directions under section 119. The Revenue contended that the taxability of the receipt was not beyond debate because it could be brought to tax under section 17(2)(v), and that on CIT v Shelly Products the Department could not be faulted for accepting returns in which the assessee had himself offered the sum.
The order of the Commissioner rejecting the revision as barred by limitation could not be faulted, and the prayers directed at that order were not entertained (para 2). But the substantive relief was granted: there was no justification for the amounts received from the superannuation fund for assessment years 1990-91, 1991-92 and 1993-94 to be brought to tax in view of the specific exclusion of such sums from total income in terms of section 10(13)(ii) (para 8), and the petition was allowed accordingly with no order as to costs (paras 9 and 10). The constraints that may have been felt by the Commissioner in deciding the revision application under section 264 do not impinge on the powers of the Court under Article 226 to correct an injustice, even one that has occurred because of the assessee himself (para 6). That tax had been paid on the sum under section 17(2)(v) did not mean the petitioner was not entitled to relief under section 10(13)(ii) (para 4).
The Court began from first principles: section 4 is the charging section, section 10 lists items of income which are not to be included in the computation of total income, and clause (ii) of section 10(13) excludes any payment from an approved superannuation fund made to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement (para 3). It characterised the difficulty as entirely of the assessee's own making, since he had offered for taxation an amount the statute excluded (para 4), and noted that for assessment year 1992-93 he had already obtained relief up to the Tribunal and the Department had not challenged it (para 5). Having invoked the extraordinary jurisdiction, the Court held that the limitation constraints operating on the Commissioner under section 264 did not limit its own powers under Article 226, and that Article 265 — no person shall be taxed without the authority of law — supplied the ground for intervening (para 6). It declined to apply CIT v Shelly Products, which the Revenue had cited for the proposition that the Department could not be faulted for accepting the returns as filed (para 7). It concluded that there was no justification for taxing the amounts in view of the specific exclusion in section 10(13)(ii) (para 8).
Article 265 of the Constitution mandates that no person shall be taxed without the authority of law.
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Handle my notice → Ask a CA on WhatsAppThe Delhi High Court gave relief on exactly those facts. It upheld the Commissioner's rejection of the section 264 revision as barred by limitation, but held that the constraints felt by the Commissioner under section 264 do not impinge on the Court's powers under Article 226; that Article 265 mandates that no person shall be taxed without the authority of law; and that since there was no authority to tax the annuities the petitioner had received, it was appropriate to exercise the extraordinary jurisdiction to correct the injustice even though the injustice was of the assessee's own making. This was decided by the High Court (Vikramajit Sen J and S. Muralidhar J) and bears on section 10(13), section 10(13)(ii), section 264, section 17(2)(v), section 119 of the Income Tax Act 1961. It is reported as (2007) 211 CTR (Del) 357, as printed on the report. The value of this decision is procedural and it travels well beyond superannuation funds. Three propositions come out of it. First, a receipt which section 10 excludes from total income does not become chargeable because the assessee mistakenly returned it — the exclusion operates on the computation, not on the assessee's election. Second, an assessee who has lost his section 264 remedy on limitation is not necessarily without relief: the writ jurisdiction is not subject to the limitation in section 264, and Article 265 supplies the substantive ground. Third, the Court declined to let CIT v Shelly Products stand in the way, rejecting the Revenue's argument that the Department could not be faulted for accepting returns in which the assessee had himself offered the sum. Two limits should be stated plainly. The Court's reasoning rested partly on the fact that for one of the intervening years, 1992-93, the petitioner had already obtained relief up to the Tribunal and the Department had not assailed that decision — so this was not a case of an unresolved legal question but of an inconsistency the Department had accepted. And the clause the Court applied, s.10(13)(ii), exempts a payment from an approved superannuation fund made "in lieu of or in commutation of an annuity", whereas the payments in issue are described in the judgment as annuities or pension received from LIC; the Court did not analyse that distinction, and this decision should NOT be cited as authority that a periodic annuity or pension from a superannuation fund is exempt. Take from it the Article 226 and Article 265 propositions, not a general proposition about superannuation annuities. If it applies to you, the first step is this: Before writing off a closed year, check whether the amount offered to tax was one that section 10 excludes altogether. An exclusion under section 10 is not waived by returning the amount.
The petitioner had received amounts from an approved superannuation fund, described in the petition as pension from LIC, and had offered them to tax in his returns for the assessment years 1989-90 to 1993-94 in the belief that they were chargeable. For assessment year 1992-93 he had already obtained relief up to the stage of the Tribunal, and that decision had not been assailed by the Department. For assessment years 1990-91, 1991-92 and 1993-94 he applied under section 264, and the Commissioner rejected the application by order dated 20 November 2002 on the ground that it was barred by limitation, holding additionally that for 1990-91 the revision could not be entertained because an appeal had been preferred. By writ petition under Article 226 the petitioner sought to quash that order, to have the delay condoned, to have the Assessing Officer directed to exclude the superannuation receipt from assessable income for the three years, and to have the Board issue directions under section 119. The Revenue contended that the taxability of the receipt was not beyond debate because it could be brought to tax under section 17(2)(v), and that on CIT v Shelly Products the Department could not be faulted for accepting returns in which the assessee had himself offered the sum. The matter was decided on 2006-11-06 by the High Court (Vikramajit Sen J and S. Muralidhar J). On those facts the High Court held as follows. The order of the Commissioner rejecting the revision as barred by limitation could not be faulted, and the prayers directed at that order were not entertained (para 2). But the substantive relief was granted: there was no justification for the amounts received from the superannuation fund for assessment years 1990-91, 1991-92 and 1993-94 to be brought to tax in view of the specific exclusion of such sums from total income in terms of section 10(13)(ii) (para 8), and the petition was allowed accordingly with no order as to costs (paras 9 and 10). The constraints that may have been felt by the Commissioner in deciding the revision application under section 264 do not impinge on the powers of the Court under Article 226 to correct an injustice, even one that has occurred because of the assessee himself (para 6). That tax had been paid on the sum under section 17(2)(v) did not mean the petitioner was not entitled to relief under section 10(13)(ii) (para 4).
The Court began from first principles: section 4 is the charging section, section 10 lists items of income which are not to be included in the computation of total income, and clause (ii) of section 10(13) excludes any payment from an approved superannuation fund made to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapacitated prior to such retirement (para 3). It characterised the difficulty as entirely of the assessee's own making, since he had offered for taxation an amount the statute excluded (para 4), and noted that for assessment year 1992-93 he had already obtained relief up to the Tribunal and the Department had not challenged it (para 5). Having invoked the extraordinary jurisdiction, the Court held that the limitation constraints operating on the Commissioner under section 264 did not limit its own powers under Article 226, and that Article 265 — no person shall be taxed without the authority of law — supplied the ground for intervening (para 6). It declined to apply CIT v Shelly Products, which the Revenue had cited for the proposition that the Department could not be faulted for accepting the returns as filed (para 7). It concluded that there was no justification for taxing the amounts in view of the specific exclusion in section 10(13)(ii) (para 8). In the words reproduced by the source cited on this page: "Article 265 of the Constitution mandates that no person shall be taxed without the authority of law." The decision followed or applied CIT v. Shelly Products — cited by the Revenue and held not to apply on these facts (para 7).
It was decided by the High Court on 2006-11-06 and is reported as (2007) 211 CTR (Del) 357, as printed on the report. 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 10(13), section 10(13)(ii), section 264, section 17(2)(v), section 119, 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 order of the Commissioner rejecting the revision as barred by limitation could not be faulted, and the prayers directed at that order were not entertained (para 2). But the substantive relief was granted: there was no justification for the amounts received from the superannuation fund for assessment years 1990-91, 1991-92 and 1993-94 to be brought to tax in view of the specific exclusion of such sums from total income in terms of section 10(13)(ii) (para 8), and the petition was allowed accordingly with no order as to costs (paras 9 and 10). The constraints that may have been felt by the Commissioner in deciding the revision application under section 264 do not impinge on the powers of the Court under Article 226 to correct an injustice, even one that has occurred because of the assessee himself (para 6). That tax had been paid on the sum under section 17(2)(v) did not mean the petitioner was not entitled to relief under section 10(13)(ii) (para 4). It arises in Salary & Perquisites, Capital Gains Exemptions and Revision & Rectification matters, on section 10(13), section 10(13)(ii), section 264, section 17(2)(v), section 119 of the Income Tax Act 1961, and was decided by Vikramajit Sen J and S. Muralidhar J. 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. If the section 264 route has been shut on limitation, do not treat that as the end. Frame the writ petition on Article 265 and on the proposition in paragraph 6 that the constraints on the Commissioner under section 264 do not impinge on the Court's powers under Article 226. Expect Shelly Products to be raised against you and be ready with paragraph 7, where the Court held it did not apply on these facts. Look for an earlier or later year in which the same claim has already been allowed and not appealed by the Department. That inconsistency did real work in this case (para 5). Do not use this case to argue that a periodic superannuation annuity is exempt. Section 10(13)(ii) speaks of a payment in lieu of or in commutation of an annuity, and the Court did not address the difference. Where the same sum has already been taxed under another provision, say so and be precise about it; here the Court noted that tax had been paid under s.17(2)(v) and held that this did not disentitle the petitioner to relief under s.10(13)(ii).
Validity check could not be completed. Validity check could not be completed. This is a 2006 Delhi High Court order and I did not search for any appeal from it, for later authority on the interaction of section 264 limitation with Article 226, or for any decision doubting it, and I make no claim that none exists. The clause it applies, s.10(13)(ii), was read independently this pass from the departmental Year 2018 edition of section 10 and stands in the same words the Court quotes; the Year 2025 edition of section 17 still carves payments referred to in clause (13) of section 10 out of profits in lieu of salary, so the exclusion continues to exist. Nothing here has been checked against the current s.17(2) numbering: the Court refers to s.17(2)(v), and sub-clause numbering in s.17(2) has changed since 2006, so a reader should not assume the reference maps to the present sub-clause (v). 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.
THE REPORT IS OCR-CORRUPT IN PLACES AND I HAVE NOT SILENTLY CLEANED IT. Throughout the report "(ii)" is printed as "(it)" — "Clause (it) of Sub-section (13)", "Section 10(13)(it)" — and "assessee" is repeatedly printed as "assessed" and once as "assessec". I have read those as (ii) and assessee, and say so rather than quoting them. THERE IS AN INTERNAL INCONSISTENCY THE REPORT DOES NOT RESOLVE. Paragraph 1 lists prayers (a) to (f), of which prayer (d) is the substantive one — a direction to exclude the superannuation receipt from assessable income for 1990-91, 1991-92 and 1993-94 — while prayers (a) to (c) all concern condoning the delay in the revision petitions. Paragraph 2 then says the Court is "not prepared to entertain prayers (a) to (c)" but that "the prayer (a) above is still open for consideration under article 226", and paragraph 9 says "prayer (a) is allowed". Read literally that is self-contradictory. The only reading that makes the order coherent is that both those references are to prayer (d), and that is how the entry reports the disposal; I flag it rather than assert it as certain. THE COURT'S DESCRIPTION OF THE SECTION NUMBERS should be treated with the same care: paragraph 3 calls s.10(13) "Sub-section (13) of Section 10" when it is a clause, and paragraph 4 refers to "Section 17(2)(v)" as the provision under which tax had been paid. PARAGRAPH COUNT was established by transcribing the whole judgment in one fetch from the plain /doc/ URL: it runs from paragraph 1 to paragraph 10, paragraph 9 containing the disposal and paragraph 10 the order as to costs; I have cited no paragraph beyond that. The key quote is from paragraph 6, was seen in the full transcription, and was re-fetched separately through /docfragment/ and returned in identical words. The report carries the citation (2007) 211 CTR (Del) 357 on its face; I have not verified that citation against the report itself. I did NOT check whether this judgment has been appealed, followed or doubted; see the validity note. 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 order of the Commissioner rejecting the revision as barred by limitation could not be faulted, and the prayers directed at that order were not entertained (para 2). But the substantive relief was granted: there was no justification for the amounts received from the superannuation fund for assessment years 1990-91, 1991-92 and 1993-94 to be brought to tax in view of the specific exclusion of such sums from total income in terms of section 10(13)(ii) (para 8), and the petition was allowed accordingly with no order as to costs (paras 9 and 10). The constraints that may have been felt by the Commissioner in deciding the revision application under section 264 do not impinge on the powers of the Court under Article 226 to correct an injustice, even one that has occurred because of the assessee himself (para 6). That tax had been paid on the sum under section 17(2)(v) did not mean the petitioner was not entitled to relief under section 10(13)(ii) (para 4).
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