Varghese v. ITO, Ernakulum

4 SCC 173Reported decision1981#595 most cited

What is Varghese v. ITO, Ernakulum authority for?

Circulars issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act are legally binding on the revenue authorities in their administration and implementation. This binding character applies even if the circulars depart from the correct interpretation of the law and cannot be ignored to the prejudice of the assessee.

164

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2004 to 2025.

Also referred to as

K.P. Varghese v. ITO · Ernakulam · Section 119 · CBDT circulars binding · revenue authorities bound · interpretation of law · prejudice to assessee · administration of Act · legal validity of circulars · K.P. Varghese

Sections most often in play

Section 127Section 132Section 143(3)Section 147Section 148Section 148ASection 149Section 151

Issues it is cited on

section 5(8)section 253(2)closely held companyprincipal director general of income-taxsection 119(1)accumulated profitssection 253(1)section 292bsection 119section 292bbsection 292section 260

Judgments citing Varghese v. ITO, Ernakulum

Teleperformance Global Services Pvt Ltd (M/S Serco Bpo Pvt. Ltd )., Mumbai vs. DCIT 5(3)(1), Mumbai

Accordingly 15. In result the appeal of both AY 2017-18 and AY 2018-19 is allowed

ITA 2815/MUM/2022[2018-19]Status: DisposedITAT Mumbai24 Apr 2023AY 2018-19

Bench: Amit Shukla () & Ms. Padmavathy S. ()

Section 115JSection 143(1)Section 143(3)Section 144C

…powers under Section 119 of the Act are binding on the revenue. 17.2 The aforementioned principle stands enunciated in a long line of judgements, including the Supreme Court's judgment rendered in K.P. Varghese v. Income Tax Officer, Ernakulam andAnr., (1981) 4 SCC 173. The relevant extracts are set forth hereafter: "12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of the Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two circulars…

Teleperformance Global Services Pvt Ltd (M/S Serco Bpo Pvt. Ltd )., Mumbai vs. DCIT 5(3)(1), Mumbai

Accordingly 15. In result the appeal of both AY 2017-18 and AY 2018-19 is allowed

ITA 2814/MUM/2022[2017-18]Status: DisposedITAT Mumbai24 Apr 2023AY 2017-18

Bench: Amit Shukla () & Ms. Padmavathy S. ()

Section 115JSection 143(1)Section 143(3)Section 144C

…powers under Section 119 of the Act are binding on the revenue. 17.2 The aforementioned principle stands enunciated in a long line of judgements, including the Supreme Court's judgment rendered in K.P. Varghese v. Income Tax Officer, Ernakulam andAnr., (1981) 4 SCC 173. The relevant extracts are set forth hereafter: "12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of the Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two circulars…

The Commissioner of Income Tax (International Taxation)-1, New Delhi vs. Brandix Mauritius Holdings Ltd

ITA - 163 / 2023HC Delhi20 Mar 2023
Section 131Section 133

…dgment rendered in K.P. Digitally Signed By:SHEHROZ ALAM Signing Date:13.04.2023 11:59:38 Signature Not Verified Neutral Citation No: 2023:DHC:2502-DB ITA 163/2023 Page 8 of 11 Varghese v. Income Tax Officer, Ernakulam and Anr., (1981) 4 SCC 173. The relevant extracts are set forth hereafter: “12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of the Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two ci…

Commissioner of Central Excise Raipur vs. M/S Sepco Electric Power Construction Corporation

C.A. No.-004928 - 2018Supreme Court11 Jul 2022

Bench: HON'BLE MR. JUSTICE M.R. SHAH

Section 65Section 73Section 75Section 76Section 77Section 78

…certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. 3.12 It is further submitted that in the case of K.P. Varghese v. Income Tax Officer, Ernakulam (1981) 4 SCC 173, this Court has emphasised that the statutory provisions must be so construed, if possible, that absurdity and mischief may be avoided. It is submitted that following the aforesaid decision in the case of Bhag Mal v. Ch. Prabhu Ram, AIR 1985 SC 150 = (1985) 1 SCC 61, it is observed and held by this Court that the plain and literal interpre…

M/S Swabhimani Souharda Credit Co Operative Ltd vs. Income Tax Officer (ITO) Ward-5(2)(3)

In the result, Writ appeals stand dismissed

ITA/832/2018HC Karnataka20 Dec 2021

Bench: S.SUJATHA,S RACHAIAH

Section 143(3)Section 260Section 4

…Section 80P which reads “Deduction in respect of income of co- operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173 as follows: -47- “9. This interpretation of sub- section (2) is strongly supported by the marginal note to Section 52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it…

M/S Swabhimani Souharda Credit Co-Operative Ltd vs. Income Tax Officer (ITO) Ward-5(2)(3

In the result, Writ appeals stand dismissed

ITA/833/2018HC Karnataka20 Dec 2021

Bench: S.SUJATHA,S RACHAIAH

Section 143(3)Section 260Section 4

…Section 80P which reads “Deduction in respect of income of co- operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173 as follows: -47- “9. This interpretation of sub- section (2) is strongly supported by the marginal note to Section 52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it…

M/S Sri Varun Souharda Credit Co Op Ltd vs. The Income Tax Officer

In the result, Writ appeals stand dismissed

ITA/295/2019HC Karnataka20 Dec 2021

Bench: S.SUJATHA,S RACHAIAH

Section 143(3)Section 260Section 4

…Section 80P which reads “Deduction in respect of income of co- operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173 as follows: -47- “9. This interpretation of sub- section (2) is strongly supported by the marginal note to Section 52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it…

M/S Udaya Souharda Credit Co-Op Society Ltd vs. The Income Tax Officer

In the result, Writ appeals stand dismissed

ITA/869/2018HC Karnataka20 Dec 2021

Bench: S.SUJATHA,S RACHAIAH

Section 143(3)Section 260Section 4

…Section 80P which reads “Deduction in respect of income of co- operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173 as follows: -47- “9. This interpretation of sub- section (2) is strongly supported by the marginal note to Section 52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it…

M/S Udaya Souharda Credit Co Op Society Ltd vs. The Income Tax Officer

In the result, Writ appeals stand dismissed

ITA/330/2019HC Karnataka20 Dec 2021

Bench: S.SUJATHA,S RACHAIAH

Section 143(3)Section 260Section 4

…Section 80P which reads “Deduction in respect of income of co- operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173 as follows: -47- “9. This interpretation of sub- section (2) is strongly supported by the marginal note to Section 52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it…

Commissioner of Gst and Central Excise vs. M/S Citibank N.A

C.A. No.-008228 - 2019Supreme Court09 Dec 2021

Bench: HON'BLE MR. JUSTICE K.M. JOSEPH

Section 35L(1)(b)Section 64(3)Section 65Section 65(10)Section 65(105)Section 65(12)Section 65(7)Section 83

…REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(S). 8228 OF 2019 COMMISSIONER OF GST AND CENTRAL EXCISE ... APPELLANT(S) VERSUS M/S CITI BANK N.A. ... RESPONDENT(S) WITH CIVIL APPEAL NO.89 OF 2021 J U D G M E N T K.M. JOSEPH, J. 1. These Appeals are maintained under Section 35L(1)(b) of the Central Excise Act, 1944, read with Section 83 of Chapter V of the Finance Act, 1994. They are directed against the Orders dated 16.11.2018 and 20.11.2019, passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai (hereinafte…

M.M. Aqua Technologies Ltd vs. Commissioner of Income Tax, Delhi - III

Appeals are allowed in the aforesaid terms

C.A. No.-004742-004743 - 2021Supreme Court11 Aug 2021

Bench: HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN

Section 43B

…of plugging a loophole – i.e. misusing Section 43B by not actually paying interest but converting interest into a fresh loan, bona fide transactions of actual payments are not meant to be affected. In similar circumstances, in K.P. Varghese v. ITO, (1981) 4 SCC 173, this Court construed Section 52 of the Income Tax Act as applying only to cases where ‘understatement’ is be found – an ‘understatement’ is not to be found in the literal language of Section 52, but was introduced by this Court to streamline the provision in the light of the object sought to be achieved by the said provision. This Court, ther…

The Principal Commissioner of Income Tax vs. The Ponkunnam Service Co-Operative Bank Ltd

Appeals are allowed and remanded back

ITA/43/2019HC Kerala16 Mar 2021

Bench: HONOURABLE MR.JUSTICE S.V.BHATTI,HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS

Section 80PSection 80P(2)Section 80P(4)

…s “Deduction in respect of income of co-operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P.Varghese v. Income Tax Officer, Ernakulam & Anr. (1981 KLT SC SN 91 (C.No.163) = (1981) 4 SCC 173) as follows: “9. This interpretation of sub-s.(2) is strongly supported by the marginal note to S.52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a Section cannot be referred to for the purpose of construing the Section but it can certainly be relied upon as indicat…

The Mavilayi Service Cooperative Bank Ltd vs. Commissioner of Income Tax Calicut

C.A. No.-007343-007350 - 2019Supreme Court12 Jan 2021

Bench: Us, The Assessing Officer Denied Their Claims For Deduction, Relying Upon Section 80P(4) Of The It Act, Holding That As Per The Audited Receipt & 2

Section 147Section 19Section 263Section 80PSection 80P(2)(a)Section 80P(4)

…ote to Section 80P which reads “Deduction in respect of income of co-operative societies” is important, in that it indicates the general “drift” of the provision. This was so held by this Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. (1981) 4 SCC 173 as follows: “9. This interpretation of sub-section (2) is strongly supported by the marginal note to Section 52 which reads “Consideration for transfer in cases of understatement”. It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it can certainly be relied upon as i…

Rajasthan State Electricity Board Jaipur vs. The Dy. Commissioner of Income Tax (Assessment)

In the result, we allow the appeal, set aside the

C.A. No.-008590-008590 - 2010Supreme Court19 Mar 2020

Bench: HON'BLE MRS. JUSTICE R. BANUMATHI

Section 143Section 143(1)(a)Section 143(2)Section 154Section 264Section 32(2)Section 617

…o have a deterrent effect and a hefty amount of 20% as additional income tax is payable on the difference between what is declared in the return and what is assessed to tax.” 18. Relying on earlier judgment of this Court in K.P. Varghese v. ITO, (1981) 4 SCC 173, this Court in the above case held that provisions of Section 143(1-A) should be made to apply only to tax evaders. In paragraphs 21 and 25 following was laid down: “21. In the present case, the question that arises before us is also as to whether bona fide assessees are caught within the net of Section 143(1-A). We hasten to add…

Commissioner of Income Tax vs. Select Infrastructure Pvt. Ltd

ITA/903/2018HC Delhi05 Dec 2018

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI

…P. Singh AIR CS(COMM) Nos.903/2018, 905/2016, 906/2016, 1415/2016, 569/2017 & 571/2017 Page 31 of 45 1960 SC 569, The Senior Electric Inspector Vs. Laxmi Narayan Chopra AIR 1962 SC 159, K.P. Varghese Vs. Income Tax Officer, Ernakulam (1981) 4 SCC 173 and Sales Tax Officer, Kanpur Vs. Union of India 1995 Suppl. (1) SCC 410. I am unable to find anything in the Designs Act to indicate that the reference therein to the 1958 Act was not, in accordance with the said general principle, intended as reference to the re-enacted 1999 Act. K. Further, if it were to be held that while one category o…

Japan Airlines Int'T Co. Ltd vs. ITO, Ward-50(2)

In the result, appeal filed by the assessee is allowed with above direction

ITA 4172/DEL/2005[2002-2003]Status: DisposedITAT Delhi27 Feb 2017AY 2002-2003

Bench: Shri H S Sidhu & Shri Prashant Maharishijapan Airlines International Co Limited Income Tax Officer Vs. Chandralok Building Tds 36, Janpath, New Delhi 50(2) New Delhi (Appellant) (Respondent)

For Appellant: Shri Rajan Mahajan. AdvFor Respondent: Ms Shweta Dutta. Sr DR
Section 131Section 133ASection 192Section 201Section 6

…Court ordinarily would interpret the provisions in favour of a tax-payer and against the Revenue." 28. This Court in a catena of decisions, has held that the circulars issued by the Department are binding on the Department. See: K.P. Varghese v. ITO [(1981) 4 SCC 173], UCO Bank v. CIT, W.B. [(1999) 4 SCC 599], Collector of Central Excise Vadodra v. Dhiren Chemical Industries [(2002) 2 SCC 127], etc. In all these cases it has been held that the circulars issued under the Income Tax Act or Central Excise Act are binding on the Department. It may be noted that in the circulars issued by the Commissioner of West Be…

DDIT, Dehradun vs. M/S. Cgg Veritas Services Sa, Dehradun

In the result, the appeal of the Revenue is dismissed

ITA 6142/DEL/2014[2010-11]Status: DisposedITAT Delhi31 Jan 2017AY 2010-11

Bench: : Shri H.S. Sidhu & Shri L.P. Sahu

For Appellant: Sh. Anil Kumar Sharma, Sr. DRFor Respondent: Sh. Amit Arora, C.A
Section 234Section 234BSection 44BSection 44DSection 9(1)(vii)

…IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH ‘B’ NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA No. 6142/Del./2014 Asstt. Year :2010-11 D.D.I.T., Intl. Taxation, vs. CGG Veritas Services SA, Dehradun. C/o Nangia & Co., 3rd Floor, NCR Plaza, New Cantt. Road, Dehradun. (PAN: AACCC 2605E) (Appellant) (Respondent) Appellant by : Sh. Anil Kumar Sharma, Sr. DR Respondent by : Sh. Amit Arora, C.A. Date of hearing : 30.01.2017 Date of pronouncement : 31.01.2017 ORDER Per L.P. Sahu, Accountant Member: This is an appeal filed by the Revenue against the order of…

ADIT, Dehradun vs. M/S. Halliburton Offshore Services Inc., Dehradun

ITA 1332/DEL/2012[2005-06]Status: DisposedITAT Delhi30 Jun 2016AY 2005-06

Bench: Shri I.C.Sudhir & Shri Prashant Maharishiadit, Halliburton Offshore Services International Taxation, Inc. , Vs. 13-A,Subhash Road, C/O. Nangia & Company, Ca, Aayakar Bhawan, 75/7, Rajpur Road, Dehradun Dehradun Pan:Aaach5154M (Appellant) (Respondent) Halliburton Offshore Services Addl. Cit, Inc. , International Taxation, Vs. C/O. Nangia & Company, Ca, Subhash Road, Suite-4A, Plaza M-6, Jasola, Dehradun New Delhi Pan:Aaach5154M (Appellant) (Respondent) Halliburton Offshore Services Inc. , Adit, C/O. Nangia & Company, Ca, International Taxation, Vs. Suite-4A, Plaza M-6, Jasola, 13-A,Subhash Road, New Delhi Aayakar Bhawan, Pan:Aaach5154M Dehradun (Appellant) (Respondent) Halliburton Offshore Services Inc. Vs Ddit (International Taxation)

Section 144CSection 44Section 44BSection 9

…8, a "mining lease" means a lease granted for the purposes of searching for, winning, working, getting, making merchandisable, carrying away or disposing of mineral oils or for the purpose connected therewith and such a lease includes an exploring or * [1981] 4 SCC 173; [1981] 131 ITR 597 (SC). prospecting lease. Reference has also been made to the Petroleum and Natural Gas Rules, 1959, framed under section 5 of the aforesaid Act. Under rule 4 of the said Rules no person can prospect for petroleum except pursuant to a petroleum exploration license (PEL) granted under the Rules and no person can mine petroleum ex…

Oil & Natural Gas Corp. Ltd vs. Commnr. of Income Tax

The appeals are allowed with no order as to

C.A. No.-000731-000731 - 2007Supreme Court01 Jul 2015
Section 44BSection 44DSection 9(1)(vii)

…licensee to carry out construction and maintenance in and on such land, works, buildings, plants, waterways, roads, pipelines etc. as may be necessary for full enjoyment of the PML. On the said basis it is argued that rendering 1 (1981) 4 SCC 173 Page 16 JUDGMENT 16 any service in connection with prospecting and extraction is an integral part of mining and that the expression “mining” in the Explanation 2 to Section 9(1) of the Income Tax Act, in the absence of any definition under the Income Tax Act, has to be understood as per the provisions of the Oil Fields (Regulation and Development…

Oil & Natural Gas Corp. Ltd vs. Commnr. of Income Tax

The appeals are allowed with no order as to

C.A. No.-000731-000731 - 2007Supreme Court01 Jul 2015
Section 44BSection 44DSection 9(1)(vii)

…licensee to carry out construction and maintenance in and on such land, works, buildings, plants, waterways, roads, pipelines etc. as may be necessary for full enjoyment of the PML. On the said basis it is argued that rendering 1 (1981) 4 SCC 173 Page 16 JUDGMENT 16 any service in connection with prospecting and extraction is an integral part of mining and that the expression “mining” in the Explanation 2 to Section 9(1) of the Income Tax Act, in the absence of any definition under the Income Tax Act, has to be understood as per the provisions of the Oil Fields (Regulation and Development…