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.