“Malabar Industrial”

Judicial DoctrinesMalabar - 263Malabar - 2631,099 judgments

The decision most relied on for Malabar Industrial is Malabar Industrial Co. Ltd. v. CIT (243 ITR 83), cited in 2,943 judgments on BharatTax.

Leading authorities on Malabar Industrial

Malabar Industrial Co. Ltd. v. CIT

243 ITR 83 · 2000 · Supreme Court

2,943

citing judgments

For revision under Section 263, the Assessing Officer's order must be both erroneous and prejudicial to the interests of the revenue; if either condition is not met, the revisionary jurisdiction cannot be invoked. An order is not erroneous merely because the Assessing Officer did not record the details of enquiries conducted, provided due enquiries were made.

CIT v. Max India Ltd.

295 ITR 282 · 2007 · Supreme Court

1,162

citing judgments

Under Section 263, an assessment order is not erroneous and prejudicial to the interest of the revenue merely because the Principal Commissioner disagrees with the Assessing Officer's (AO) view, particularly if the AO has adopted one of two permissible views in law, unless that view is completely unsustainable. If due inquiries were made, the AO's order does not become erroneous solely because the fact of inquiries was not recorded.

Rampyari Devi Saraogi v. CIT

67 ITR 84 · 1968 · Supreme Court

616

citing judgments

An assessment order is erroneous and prejudicial to the Revenue's interests if the Assessing Officer accepts a sum offered as income by an assessee, even when that sum was not actually earned, thereby allowing revision under Section 263.

CIT v. Amitabh Bachchan

384 ITR 200 · 2016 · Supreme Court

264

citing judgments

The Commissioner's revisional power under Section 263 of the Income Tax Act is not limited to the points specified in the show-cause notice, nor is the exercise of this power contingent upon issuing a show-cause notice.

Mantola Co-operative Thrift & Credit Society Ltd. v. CIT

50 Taxmann.com 278 · 2014 · High Court

242

citing judgments

A cooperative society is not entitled to deduction under Section 80P(2)(a)(i) for interest income earned from investments and deposits which are not attributable to its primary business. An assessment order erroneously allowing such a deduction is revisable under Section 263 as being erroneous and prejudicial to the revenue, or subject to reassessment under Section 147.

Narayan Tatu Rane v. ITO

70 Taxmann.com 227 · 2016 · ITAT

220

citing judgments

Before revising an assessment order under Section 263, the CIT/PCIT must conduct their own inquiries or verifications to establish that the Assessing Officer's order is erroneous and unsustainable in law, rather than merely directing further inquiry or pointing out the AO's lack of inquiry.

DIT v. Jyoti Foundation

357 ITR 388 · 2013 · High Court

210

citing judgments

An assessment order cannot be deemed erroneous and prejudicial to the interest of revenue under Section 263 if the Assessing Officer conducted an inquiry and applied their mind during the original assessment, as Explanation 2 to Section 263 does not permit unending inquiries by the revisional authority.

Grasim Industries Ltd. v. CIT

321 ITR 92 · 2010 · High Court

194

citing judgments

This case clarifies the scope of the Commissioner's revisional powers under Section 263 of the Income-tax Act, holding that an assessment order can only be revised if it is both erroneous and prejudicial to the interests of the revenue, echoing the principles laid down in Malabar Industrial.

Judgments citing Malabar Industrial

Ram Baburao Salve, Mumbai vs. ITO WD 17(3)(!), Mumbai

In the result the appeal filed by the assessee stands allowed

ITA 5370/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Oct 2025AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain & Shri Girish Agarwal & Assessment Year: 2011-12

Section 143(3)Section 263Section 68

order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue is justifiable in law arises for consideration. 19. In Malabar Industrial Co. Ltd. Vs. CIT (200) 159 CTR (SC) 1: (2001) 243 ITR 83 (SC) the apex Court considered the meaning of "prejudicial to Revenue ... page-2-para-6 reading as under:- “6. It is pertinent to cite the decision of the Apex Court in the case of Malabar Industrial Company Limited Vs. CIT reported in 243 ITR 83, wherein it was held that "Prejudicial to the interest of Revenue" is not an expression

Haryana Building and Other Construction Workers Welfare Board, Panchkula vs. DCIT, Exemption, Chandigarh

In the result, this appeal of the Assessee stands dismissed

ITA 337/CHANDI/2023[2016-17]Status: DisposedITAT Chandigarh10 Oct 2025AY 2016-17

Bench: Shri Laliet Kumar & Shri Krinwant Sahayआयकर अपील सं./ Ita No. 237/Chd/2020 निर्धारण वर्ष / Assessment Year : 2014-15 Haryana Building & Other Construction Workers Welfare Board, Bays No. 29- 30, Sector 4, Panchkula, Haryana The Dcit, बनाम Circle 2, Vs. Exemption, Chandigarh स्थायी लेखा सं./ Pan No: Aaath6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent आयकर अपील सं./ Ita Nos.337 To 339/Chd/2023 निर्धारण वर्ष / Assessment Years : 2016-17, 2017-18 & 2018-19 Haryana Building & Other Construction Workers Welfare Board, Bays No. 29- 30, Sector 4, Panchkula, Haryana The Dcit बनाम Exemption, Vs. Chandigarh स्थायी लेखा सं./ Pan No: Aaath6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent आयकर अपील सं./ Ita No. 63/Chd/2021 निर्धारण वर्ष / Assessment Year : 2015-16 Haryana Building & Other Construction Workers Welfare Board, Bays No. 29-30, Sector 4, Panchkula, Haryana The Dcit बनाम Exemptions, Vs. Chandigarh स्थायी लेखा सं./ Pan No: Aaath6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent ( Physical Hearing ) निर्धारिती की ओर से/Assessee By : Sh. Nikhil Goyal, Advocate, Sh. Ashok Goyal, Ca & Sh. Sifatfreet Singh, Ca राजस्व की ओर से/ Revenue By : Sh. Manav Bansal, Cit Dr सुनवाई की तारीख/Date Of Hearing 08.12.2025 उदघोषणा की तारीख/Date Of Pronouncement 10.12.2025 आदेश/Order Per Bench: The Captioned Appeals Preferred By The Assessee Are Directed Against The Separate Orders Of The Ld. Commissioner Of Income- Tax (Appeals) For Different Assessment Years, As Per The Details Given Below: S.No.

For Appellant: Sh. Nikhil Goyal, AdvocateFor Respondent: Sh. Manav Bansal, CIT DR

Section 263

impugned order fails the basic jurisdictional test under section 263 and is liable to be quashed. 3.3.4 The Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (243 ITR 83) has laid down the twin requirements of section 263: the order must be both erroneous and prejudicial ... prefers a different view. 3.6.3 The impugned order also suffers from internal contradictions inasmuch as it quotes the binding principle laid down in Malabar Industrial Co. Ltd. v. CIT [243 ITR 83]—that both error and prejudice must co-exist but fails to apply this principle to the facts

Kanigere Ramegowda Ningaraju, Hassan vs. Income Tax Officer, Ward 1 & Tps, Hassan

In the result, the appeal of the assessee is hereby allowed

ITA 1046/BANG/2025[2015-16]Status: DisposedITAT Bangalore09 Oct 2025AY 2015-16

Bench: Shri Waseem Ahmed & Shri Soundararajan Kassessment Years : 2015-16

For Appellant: Shri V Shivarama Iyer, C.AFor Respondent: Shri Shivanand H Kalakeri, CIT (DR)

Section 144BSection 147Section 148Section 148ASection 263Section 269SSection 45

section 263 arises only when the order is both erroneous and prejudicial to the interests of the revenue. The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (243 ITR 83) has held that where the Assessing Officer has taken one of the possible views, the same cannot

Devi Sea Foods Limited, Visakhapatnam vs. Principal Commissioner of Income Tax, Visakhapatnam

In the result, appeal of the assessee is partly allowed for statistical

ITA 316/VIZ/2025[2020-21]Status: DisposedITAT Visakhapatnam08 Oct 2025AY 2020-21

Bench: Shri Ravish Sood, Hon’Ble

Section 143(3)Section 145Section 14ASection 263

revenue while exercising his powers conferred under section 263 of the Act. The Hon’ble Supreme Court in the judgment reported in Malabar Industrial Co. Ltd. v. CIT[2000] 243 ITR 83, held that the power under section 263 of the Act is rather wide provided the Commissioner will have

Sharmanji Yarns Private Limited, Ludhiana vs. Principal Commissioner of Income Tax-1, Ludhiana

The appeal stand allowed in terms of our above order

ITA 706/CHANDI/2025[2020-21]Status: DisposedITAT Chandigarh08 Oct 2025AY 2020-21

Bench: SHRI LALIET KUMAR (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)

For Appellant: Shri Ashwani Kumar (CA) -Ld. ARFor Respondent: Smt. Tarundeep Kaur(CIT) – Ld. DR

Section 142(1)Section 143(3)Section 263

understated. The ratio of this decision squarely applies to the facts of present case before us. 14. The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (243 ITR 83) has held that the phrase 'prejudicial to the interests of the revenue has to be read in conjunction

Pharmanza Herbal Private Limited, Dharmaj vs. The Principal Commissioner of Income Tax, Vadodara-1, Vaodara

ITA 749/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad08 Oct 2025AY 2018-19

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Biren Shah, ARFor Respondent: Shri Alpesh Parmar, CIT DR

Section 143(3)Section 263Section 35

DSIR, and therefore allowed excess deduction in contravention of law. Referring to the twin conditions laid down by the Hon’ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) that for invoking section 263, the order must be both erroneous and prejudicial ... thereby causing prejudice to the interests of the Revenue. Accordingly, invoking powers under section 263 of the Act, and following judicial precedents including Malabar Industrial Co. Ltd. (supra) and CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom.), the Pr. CIT held that the assessment order dated

Amber Enterprises India Limited, Rajpura, Punjab vs. The Principal Commissioner of Income Tax, Patiala, Punjab

In the result, the appeal of the assessee is allowed

ITA 554/CHANDI/2025[2020-21]Status: DisposedITAT Chandigarh07 Oct 2025AY 2020-21

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. MANOJ KUMAR AGGARWAL (Accountant Member)

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Smt. Meenakshi Vohra, CIT, DR (Virtual)

Section 133(6)Section 142(1)Section 143(3)Section 144BSection 263Section 35Section 35(1)(i)

submitted that the AO conducted full enquiry and adopted a plausible view. Hence, the order is neither erroneous nor prejudicial. Reliance is placed on: Malabar Industrial Co. Ltd. v. CIT (243 ITR 83, SC) – Twin conditions must  co-exist. CIT v. Gabriel India Ltd. (203 ITR 108, Bom HC) – When ... supra) squarely applies that once enquiries were made, the adequacy thereof cannot be gone into by invoking section 263. Further, as held in Malabar Industrial Co. Ltd. (supra), the twin conditions of the order being erroneous and prejudicial must co-exist. In the present case, the Assessing Officer had adopted

P Y C Hindu Gymkhana, Pune vs. Commissioner of Income Tax (Exemption), Pune

In the result, the appeal filed by the assessee is partly allowed

ITA 1321/PUN/2025[2021-22]Status: DisposedITAT Pune06 Oct 2025AY 2021-22

Bench: Dr.Manish Borad & Shri Vinay Bhamore

For Appellant: Shri C.H. NaniwadekarFor Respondent: Shri Amit Bobde

Section 11Section 142(1)Section 143(2)Section 143(3)Section 2(15)Section 263

propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 13. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC)has laid down following ratio with regard to provisions of section

Netscribes Data & Insights Pvt Ltd, Mumbai vs. Principal Commissioner of (PCIT)-8, Mumbai

ITA 2508/MUM/2025[2020-21]Status: DisposedITAT Mumbai06 Oct 2025AY 2020-21

Bench: Shri Narender Kumar Choudhry (Jm) & Shri Omkareshwar Chidara (Am) Netscribes Data & Insights P.L. Pcit-8 Office No. 504, 5Th Floor 611, Aayakar Bhavan Lodha Supremus, Lower Parel Vs. M.K. Road Delisle Road, Mumbai-400013. Mumbai-400 020. Pan : Aaccn7742F Appellant Respondent

For Appellant: Shri Leyaqat Ali AafaquiFor Respondent: Shri Niranjan Govindekar

Section 263Section 80G

Revenue’. It is a settled law that both the conditions should be satisfied to assume the jurisdiction under section 263 of the Act Malabar Industrial Co. (supra). In the impugned case, there are several decisions in favour of the appellant, as mentioned above and hence, it cannot be said that

Vasai Urban Cooperative C Redit Society Ltd, Vasai vs. PCIT-1, Thane

In the result, the appeal by the assessee allowed

ITA 2622/MUM/2025[2020-21]Status: DisposedITAT Mumbai01 Oct 2025AY 2020-21

Bench: SHRI OM PRAKASH KANT (Accountant Member), MS. KAVITHA RAJAGOPAL (Judicial Member)

For Appellant: Shri Bhupendra ShahFor Respondent: Shri Vivek Perampurna (CIT-DR)

Section 143(3)Section 263Section 56Section 80P(2)Section 80P(2)(d)

prejudicial to the interest of the revenue by relying on the decision of the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC). The relevant extract of the said decision is cited herein under for ease of reference ... interest earned from the Co-operative Banks and thus the assessment order cannot be held to be erroneous. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v/s CIT, [2000] 243 ITR 83 (SC) held that in order to invoke section 263, the assessment order must be erroneous

Saurashtra Gramin Bank Manager (F & A), Rajkot vs. The Pr. Commissioner of Income Tax-I, Rajkot

In the result, the appeal filed by the assessee is allowed

ITA 37/RJT/2022[2017-18]Status: DisposedITAT Rajkot30 Sept 2025AY 2017-18

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपील सं./Ita No. 37/Rjt/2022 (Assessment Year: 2017-18) (Hybrid Hearing) Saurashtra Gramin Bank Vs. The Pr. Cit-1, Manager (F & A), Rajkot 1St Floor Wing 2, Lic Jeevan Prakash Building, Tagore Road, Rajkot-360001 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aahas2116H (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Ms. A.D. Vyas, ARFor Respondent: Shri Sanjay Punglia, CIT-DR

Section 143(3)Section 14ASection 263Section 36(1)(viii)Section 37(1)

views are possible and following observations of the Tribunal, in this backdrop, become relevant : "38. Still further, the Hon'ble Supreme Court in Malabar Industrial Co. Ltd.'s case (supra) has held that when two views are possible and the Assessing Officer has taken one of the possible view, then ... cannot be held to be justified. 8. In view of this and following the principles laid down by the Supreme Court in Malabar Industrial Co. Ltd.'s case (supra), we are of the view that having regard to the facts and circumstances of the case, the Tribunal was justified

Precious Bjuildtech Private Limited, Bareilly vs. PCIT, Bareilly

In the result, the appeal of the assessee is partly allowed

ITA 66/LKW/2022[2017-2018]Status: DisposedITAT Lucknow30 Sept 2025AY 2017-2018

Bench: Shri Kul Bharat & Shri Nikhil Choudharyआयकर अपील सं/ Ita No.66/Lkw/2022 ननिाारण वर्ा/ Assessment Year: 2017-18 Precious Buildtech Pvt Ltd V. Pcit Harmony Apartment, Adiacent Income Tax Department, To Bedi International School, Bareilly-243001. Dental College Road, Pilibhit Bypass Road, Bareilly-243001. Pan:Aagcp1255R अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) अपीलार्थी कक और से/Appellant By: Shri Rakesh Garg, Adv प्रत्यर्थी कक और से /Respondent By: Shri Mazhar Akram, Cit(Dr) सुनवाई कक तारीख / Date Of Hearing: 24 07 2025 घोर्णा कक तारीख/ Date Of 30 09 2025 Pronouncement: आदेश / O R D E R

For Appellant: Shri Rakesh Garg, AdvFor Respondent: Shri Mazhar Akram, CIT(DR)

Section 143(3)Section 263

issued u/s 263 of the Act and also placed reliance on the judgment of the Hon’ble Supreme Court rendered in the case of Malabar Industrial Co. Ltd vs CIT (2000) 109 Taxman 66. He, therefore, submitted that the finding of the Ld. PCIT may be upheld. He contended that

Rajesh Balvantrai Brahmbhatt, Ahmedabad vs. The Pr. CIT(Central), Ahmedabad

In the result, the appeals of the assessee is allowed

ITA 1160/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad30 Sept 2025AY 2020-21

Bench: Shri Siddhartha Nautiyal & Shri Makarand V.Mahadeokar

For Appellant: Shri Dhiren Shah, andFor Respondent: Shri Sher Singh, CIT-DR

Section 131Section 132Section 133(6)Section 133ASection 143(3)Section 153CSection 263

enquiry” and cases of “adequate enquiry but adoption of one plausible ITA No.1157 to 1160/Ahd/2025 31 view.” The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. (243 ITR 83) clearly held that where two views are possible and the AO has taken one such view after enquiry, the order ... case, however, the AO has made specific and detailed enquiries and taken a considered view, which falls within the protection of the ratio in Malabar Industrial Co. Ltd. (SC), Max India Ltd. (SC), and Asiatic Bearing Co. (Guj HC). Consequently, Explanation 2 to section 263 does not assist

Rajesh Balvantrai Brahmbhatt, Ahmedabad vs. The Pr. CIT(Central), Ahmedabad

In the result, the appeals of the assessee is allowed

ITA 1159/AHD/2025[2019-20]Status: DisposedITAT Ahmedabad30 Sept 2025AY 2019-20

Bench: Shri Siddhartha Nautiyal & Shri Makarand V.Mahadeokar

For Appellant: Shri Dhiren Shah, andFor Respondent: Shri Sher Singh, CIT-DR

Section 131Section 132Section 133(6)Section 133ASection 143(3)Section 153CSection 263

Rajesh Balvantrai Brahmbhatt, Ahmedabad vs. The Pr. CIT(Central), Ahmedabad

In the result, the appeals of the assessee is allowed

ITA 1158/AHD/2025[2018-19]Status: DisposedITAT Ahmedabad30 Sept 2025AY 2018-19

Bench: Shri Siddhartha Nautiyal & Shri Makarand V.Mahadeokar

Section 131Section 132Section 133(6)Section 133ASection 143(3)Section 153CSection 263

Rajesh Balvantrai Brahmbhatt, Ahmedabad vs. The Pr. CIT(Central), Ahmedabad

In the result, the appeals of the assessee is allowed

ITA 1157/AHD/2025[2017-18]Status: DisposedITAT Ahmedabad30 Sept 2025AY 2017-18

Bench: Shri Siddhartha Nautiyal & Shri Makarand V.Mahadeokar

Section 131Section 132Section 133(6)Section 133ASection 143(3)Section 153CSection 263

M/S. Kolte-Patil Integrated Townships Limited, Pune vs. PCIT - 4, Pune

In the result, the appeal filed by the assessee is allowed

ITA 1030/PUN/2025[2020-21]Status: DisposedITAT Pune30 Sept 2025AY 2020-21

Bench: Shri R. K. Panda & Ms. Astha Chandraassessment Year : 2020-21

For Appellant: Shri Nikhil S PathakFor Respondent: Shri Amol Khairnar, CIT-DR

Section 143(1)Section 143(3)Section 263Section 3Section 41Section 41(1)

propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 10.2. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC)has laid down following ratio with regard to provisions of section

Professional Artist Cosmetics LLP, Mumbai vs. Principal Commissioner of Income Tax -41, Mumbai

In the result, the appeal of the assessee is allowed

ITA 3799/MUM/2025[2021-22]Status: DisposedITAT Mumbai30 Sept 2025AY 2021-22

Bench: SHRI AMIT SHUKLA (Judicial Member), SMT RENU JAUHRI (Accountant Member)

Section 142(1)Section 143(3)Section 263

demonstrate that the order could have been written differently or that some other view is also possible. As held by the Supreme Court in Malabar Industrial Co. Ltd., the jurisdiction under section 263 cannot be exercised for a mere change of opinion. The Bombay High Court in Gabriel India

M/S. Parishram Builders, Veraval vs. The Pr. Commissioner of Income Tax-1, Rajkot

In the result, appeal filed by the assessee, is allowed

ITA 98/RJT/2021[2015-16]Status: DisposedITAT Rajkot29 Sept 2025AY 2015-16

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपील सं /.Ita No.98/Rjt/2021 "नधा"रणवष"/ Assessment Year: 2015-16 M/S. Parisharam Builders The Pr. Commissioner Of बनाम Krunal Complex, Income Tax, Rajkot-1, 1St Floor, Junagadh Road, Veraval Vs. Rajkot Gujarat-362266 Pan : Aacfp5403G (अपीलाथ"/Appellant) (""यथ"/Respondent) :

For Appellant: Shri Mehul Ranpura, ld.ARFor Respondent: Shri Sanjay Punglia, CIT-DR

Section 143(3)Section 263Section 40A(2)(b)

case of Parshuram Pottery Works Co. Ltd. vs. ITO (106 ITR 01). (C) Decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT 243 ITR 83. (d) Decision of the Hon'ble Gujarat High Court in the case of CIT v/s. Arvind Jewellers ... Arvind Jewellers [2003] 259 ITR 502 (Guj) following the ratio of decision of Hon’ble Supreme Court in the case of of Malabar Industrial Co. Ltd. Vs. CIT [2000] 243 ITR 83 (SC) by holding as under: “Held, that the finding of fact by the Tribunal was that the assessee

Colgate Palmolive (India) Limited, Mumbai vs. Principal Commissioner of Income Tax -6, Mumbai

In the result, appeal of the assessee is allowed

ITA 3293/MUM/2025[2018-19]Status: DisposedITAT Mumbai29 Sept 2025AY 2018-19

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

For Appellant: Shri J D Mistry, Sr. AdvocateFor Respondent: Shri R A Dhyani, CIT DR

Section 143(3)Section 144Section 263Section 37(1)Section 80G

While coming to the aforementioned conclusion, we draw support from the decision of the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd., 243 ITR 83 (SC), where the Hon’ble Supreme Court has laid down the following ratio:- “A bare reading of section ... said word 'profits' existed. In our view the matter is squarely covered by the judgment of this Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 as also by the judgment of the Calcutta High Court in the case of Russell Properties