3 Section 264 : Revision– fresh claim of the deduction can be entertained – delay in filing the Revision Application – for reasonable cause it should have been condoned – order rejecting the revision application was set aside.

1.    Dwarikesh Sugar Industries Ltd vs. DCIT [ Writ Petition no 1206 of 2018, Dated: 12^th July, 2018 (Bombay High Court)]. 

The assessee is engaged in manufacture of sugar. It purchases sugarcane from farmers through various Societies established by the State Government under the U.P. Sugarcane (Regulation of Supply & Purchase) Rules, 1954. The assessee is required to pay commission to the above Societies from whom sugarcane is procured. During the year, the assessee paid the Societies, the Commission under the Sugarcane Act upto January, 2012. However, the assessee was under a belief that the State Government would announce waiver of commission to be paid to the Society under the Sugarcane Act for the months of February and March, 2012. In the above view, the assessee did not claim deduction on account of the above accrued liability in its assessment for A.Y. 2012-13. However, the waiver as expected from the State Government did not come. On the contrary, on 19^th June, 2012 the State Government called upon the assessee to pay the Commission of Rs.4.25 crores payable to the sugarcane Societies for having acquired sugarcane from them during February and March, 2012. In the aforesaid circumstances, during the previous year relevant to A.Y 2013-14, the assessee paid the commission of Rs.4.25 crores to the Societies under the Sugarcane Act. 

The assessee claimed a deduction of Rs.4.25 crores in its return for the previous year relevant to the A.Y. 2013-14. However, the A.O, did not accept the assessee’s claim for deduction of Rs.4.25 crores being commission paid to the Societies under the Sugarcane Act. This on the ground that the payment relates to the A.Y. 2012-13 and therefore could not be allowed as a deduction in the A.Y. 2013-14. 

Consequent to the above, the assessee filed an Appeal before the CIT(A). At the same time, the assessee also filed a Revision Application u/s. 264 of the Act before Pr. CIT alongwith an application for condonation of delay. The Pr. CIT rejected the Assessee’s application for condonation of delay. This on the ground that the assessee could have made this claim in a revised return for the A.Y 2012-13, which infact it filed on 8^th June, 2013. This without claiming this deduction. Thus, the impugned order found, there is no cause for the delay and rejected the condonation of delay application. Further, on merits also, Pr. CIT rejected the claim. 

Consequent to the above, the assessee filed an Writ Petition before the High Court. The Assessee relied the decisions of the Delhi High Court in Rajesh Kumar Aggarwal vs. CIT[2017] (78) taxmann.com 265 and the decision of the Kerala High Court in Transformers & Electricals Kerala Ltd. Vs. DCIT[2016] 75 taxmann.com 298 wherein a view has been taken that the powers of revision u/s. 264 of the Act are very wide and is not restricted to only consideration of claims made before the A.O. Therefore, it is submitted that it would be appropriate that, Pr. CIT passes a fresh order after hearing the parties and considering the above decisions relied upon by the parties .

The Revenue submits that restoring the Revision Application would be a futile exercise as the Revision Application itself is not maintainable. It is pointed out that the claim of deduction of Rs.4.25 crores being the payment made to the Societies was not a claim made either in the original or revised return of income before the A. O. Thus, relying upon the decision of the Apex Court in Goetze (India) Ltd. vs. CIT, 2006 (284) ITR 323, it is submitted that such a claim could not be made before the CIT in Revision u/s. 264 of the Act.

The Hon. Court find that the delay in filing the Revision Application u/s. 264 of the Act is concerned, it is the assessee’s case that as payments of commission to Societies under the Sugarcane Act was made in previous year relevant to A.Y 2013-14. This was consequent to the order dated 19^th June, 2012 of the State Government. Therefore, they took a view that, the deduction was allowable in A.Y 2013-14. It was in the above context, that though the assessee had filed a revised return of income, in the year 2013 for A.Y 2012-13, it did not claim the deduction of Rs.4.25 crores being the amount paid to the Societies. It was only after A.O, by his order dated 25^th March, 2016 held that, this deduction of Rs.4.25 crores relates to A.Y 2012-13 and therefore could not be allowed in the A.Y 2013-14 that the assessee was compelled to file the Revision Petition so as to claim the deduction. This to ensure that, in atleast one of the two assessment years it gets the benefit of deduction.

It is to be noted that the assessee filed its Revision Application on 22^nd April, 2016 i.e. within a month of the order of the A.O  relating to A.Y 2013-14. In the aforesaid circumstances, the reason in filing the Revision Application is for reasonable cause and should have been condoned by the Pr. CIT. In the above circumstances, delay was condoned and revision application was restored to the Pr. CIT for disposal of the application on merits. Petition was allowed.