The Supreme Court refused to interfere with a tax department appeal against Britannia Industries Ltd, upholding a Calcutta High Court ruling that had set aside an Income Tax revision order. The issue is regarding the valuation of the property that the company acquired, and deductions claimed for regulatory dues like taxes.
A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe, while refusing to interfere with the order of the High Court, kept the interpretation of Section 56(2)(x) of the IT Act, which deals with the taxation of property obtained for insufficient acknowledgement, and Section 43B, which permits deductions merely on an actual payment basis, open for consideration in an appropriate case. The Court said that-
“While we are not inclined to interfere with the Special Leave Petition against the judgment and order passed by the High Court, the interpretation of the High Court on Section 56(2)(x) coupled with Section 43-B of the Income Tax Act, 1961 is kept open for being considered in an appropriate case.”
The High Court ruled that Section 263 could not be applied because the two conditions of “error” and “prejudice to revenue” were not met. The court determined that the Assessing Officer had reviewed the issues involved, that Section 56(2)(x) did not apply due to when the transaction occurred, and that disallowing u/s 43B would lead to unacceptable double taxation.
The dispute is of the AY 2018-19, where Britannia had acquired land and building via agreements on December 31, 2016, and September 6, 2017, with registration completed in 2017-18. On March 22, 2021, the assessment was completed.
Thereafter, u/s 263, PCIT issued a show cause notice (SCN) on November 30, 2022, and passed a revision order dated March 29, 2023, alleging the absence of inquiry and undervaluation of property.
A difference in valuation of nearly Rs 89 crore between the transaction value and stamp duty value has been pointed out by the Revenue, and also disputed deductions of more than Rs 10 crore claimed for the regulatory dues.
Read Also: Calcutta HC Upholds ITAT Order Removing ₹4 Cr Addition in Reassessment Case
Before the ITAT, Britannia contested the revision, which, by order dated March 6, 2024, permitted the appeal and set aside the order of PCIT. The HC confirmed this opinion, leading to the present appeal, which has now been dismissed by the Supreme Court.
| Case Title | Principal Commissioner of Income Tax vs. M/S Britannia Industries Limited |
| Citation | No(s). 20632/2026 |
| Appellant by | Mr. N Venkataraman, Mr. Venkataraman Chandrashekhara Bharathi, Mrs. Pankhuri Srivastava, Mr. B K Satija, Mr. Amit Sharma V, and Mr. Sudarshan Lamba |
| Supreme Court | Read Order |
