27. Revision – Limitation – Section 263 – A. Y. 2007-08 – Reassessment in respect of items other than item sought to be revised by Commissioner – Period of limitation begins from original assessment – Not from date of reassessment in which item was not in question

I. G. Electronics India Pvt. Ltd. vs.
Principal CIT; 388 ITR 135 (All):

For the A. Y. 2007-08, the assessment u/s.
143(3) was completed on 31/10/2011. Sales tax incentive received from UP
Government was treated as revenue receipt, but the sales tax subsidy received
from the Maharashtra Government was not treated as revenue receipt and
accordingly was accepted as capital receipt. Subsequently, a reassessment order
u/s. 147 was passed on 15/03/2015 making disallowance u/s. 40(a)(i), on account
of non-deduction of tax at source. Thereafter, on 08/06/2016, the Principal
Commissioner issued notice u/s. 263, on the ground that the sales tax subsidy
accruing to the assessee under the scheme of the Government of Maharashtra was
not brought to tax as revenue receipt.

The Allowed High Court allowed the writ
petition filed by the assessee challenging the notice u/s. 263 and held
as under:

“i)  Limitation prescribed u/s.
263(2) for exercise of power u/s. sub-section (1) thereof is two years from the
end of financial year in which the order sought to be revised was passed.

ii)  The reassessment order was
not for review or reassessment of the entire case but only in respect of a
particular item. In all other respects, the original assessment order was
maintained, and addition made by assessment order dated 26/03/2015 was added in
the income assessed in the original assessment order. Though the notice u/s.
263(1) referred to the reassessment order, in fact, it referred to a
discrepancy in the regular assessment order dated 31/10/2011, wherein the
incentive of value added tax from Maharashtra Government received by the
assessee was allowed to be deducted. This incentive had no concern with the
reassessment proceedings in the order dated 26/03/2015.

iii)  Since the notice issued
by the Principal Commissioner was in reference to a discrepancy in the original
assessment order dated 31/10/2011 and not the reassessment order dated
26/03/2015, the limitation would run from the dated of the regular order of
assessment and therefore, the notice was barred by limitation prescribed u/s.
263(2). Impugned notice dated 08/06/2016 is quashed.”