Section 263 of the Income Tax Act

Income-tax Act, 2025: s.377

Section 263 of the Income-tax Act, 1961 corresponds to section 377 (Revision of orders prejudicial to revenue) of the Income-tax Act, 2025.

Read section 377 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 263 is Malabar Industrial Co. Ltd. v. CIT (243 ITR 83), cited in 2,943 of the 13,616 judgments on BharatTax that turn on this section.

Leading authorities on Section 263

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.

Totgars Co-operative Sale Society Ltd. v. ITO
322 ITR 283 · 2010 · Supreme Court
1,283
citing judgments

The interest income earned by a cooperative society from investing its surplus funds in fixed deposits with banks is not "derived from" its eligible business activities and is taxable as "income from other sources" under Section 56, thus not qualifying for deduction under Section 80P.

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.

CIT v. Gabriel India Ltd.
203 ITR 108 · 1993 · High Court
990
citing judgments

The Commissioner cannot revise an assessment order under Section 263 merely because they hold a different opinion or believe a deeper inquiry was warranted if the Assessing Officer has applied their mind and conducted some inquiry. Revision under Section 263 is permissible only in cases of a complete lack of inquiry or non-application of mind by the Assessing Officer, not for merely inadequate inquiry.

CIT v. Sunbeam Auto Ltd.
332 ITR 167 · 2011 · High Court
897
citing judgments

The Commissioner cannot revise an assessment under Section 263 merely because the assessment order does not explicitly reflect an inquiry, or because the Commissioner holds a different opinion. An inquiry, even if considered inadequate, or an assessment based on a plausible view by the Assessing Officer after due examination, does not automatically make the order erroneous or prejudicial to the interests of the revenue.

State Bank Of India v. CIT
389 ITR 578 · 2016 · High Court
817
citing judgments

Income arising from a cooperative society's surplus funds invested in short-term deposits and securities is not attributable to the society's core activities and, therefore, is not eligible for exemption under Section 80P(2)(a)(i) of the Income-tax Act.

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.

Madras Industrial Investment Corporation Ltd. v. CIT
225 ITR 802 · 1997 · Supreme Court
568
citing judgments

Expenditure that provides an enduring benefit should be amortized over its useful life, not allowed as a deduction in a single year, to prevent a distorted picture of profits. Specifically, premium paid on debentures for their issue should be amortized on a straight-line method over the life of the debentures.

Gee Vee Enterprises v. Addl. CIT
99 ITR 375 · 1975 · High Court
543
citing judgments

An assessment order is erroneous and prejudicial to the interest of revenue if the Assessing Officer fails to make proper inquiries before accepting the assessee's statements or claims. The Commissioner can revise such an order under Section 263 without conducting further inquiries himself.

Subramanian and Anr. v. Siemens India Ltd. and Anr.
156 ITR 11 · 1985 · High Court
541
citing judgments

When there is a conflict between the decisions of non-jurisdictional High Courts, the view that favors the assessee should be preferred.

Judgments on Section 263

Rajesh Falor, Durgapur vs. PCIT-, Asansol

In the result, appeal of the assessee is allowed

ITA 247/KOL/2022[2017-18]Status: DisposedITAT Kolkata31 Oct 2022AY 2017-18

Bench: Shri Sanjay Garg, Hon’Ble & Shri Manish Borad, Hon’Blei.T.A. No. 247/Kol/2022 Assessment Year: 2017-18 Rajesh Falor Pcit, Asansol Armstrong Avenue Vs Flat – 4, Armstrong Apartment Bidhannagar Durgapur - 713212 Pan : Aacpf9864D अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Swapnil Megotia, C.A. Revenue By : Shri Vijay Kumar, Addl. Cit सुनवाई क" तारीख/Date Of Hearing : 29/09/2022 घोषणा क" तारीख/Date Of Pronouncement : 31/10/2022 आदेश/O R D E R Per Shri Manish Borad: The Present Appeal Is Directed At The Instance Of The Assessee Against The Order Of The Learned Pricipal Commissioner Of Income Tax - Asansol (Hereinafter The “Ld. Pr. Cit”) Dt. 12/03/2022, Passed U/S 263 Of The Income Tax Act, 1961 (“The Act’), For Assessment Year 2017-18. 2. There Is A Delay Of 41 Days In Filing Of This Appeal By The Assessee. The Assessee Has Filed A Condonation Petition. We Have Heard Both The Sides & Find That There Is Reasonable Cause For Delay In Filing Of The Appeal On Time. Hence We Condone The Delay & Admit The Appeal For Hearing. 3. Through The Grounds, The Assessee Has Challenged The Assumption Of Jurisdiction U/S 263 Of The Act By The Ld. Pr. Cit. 4. Brief Facts Of The Case Are That The Assessee Is An Individual & E-Filed Its Return Of Income On 30/10/2019 Declaring Total Income Of Rs.51,46,010/- For Assessment Year 2017-18. This Return Was Revised On 10/11/2019 Declaring Income At Rs.19,54,740/-. Subsequently The Case Was Selected For Scrutiny & Assessment Was Completed On 30/12/2019 Assessing Total Income At Rs.64,17,117/-

For Appellant: Shri Swapnil Megotia, C.AFor Respondent: Shri Vijay Kumar, Addl. CIT
Section 263

Sandeep Saraf(HUF), Kolkata vs. ITO, Ward-43(6), Kolkata

In the result, the appeal of the assessee is dismissed

ITA 155/KOL/2021[2015-16]Status: DisposedITAT Kolkata31 Oct 2022AY 2015-16

Bench: : Sri Rajpal Yadav & Sri Manish Boradआयकर अपील सं"या/ I.T.A. No.155/कोल/2021 "नधा"रण वष"/Assessment Year: 2015-16 Sandeep Saraf-Huf ...…………............................ (अपीलाथ"/Appellant [Pan: Aajhs 1452F] Vs. Pcit-15, Kolkata ………........................................(""यथ")/Respondent Appearances By: Sh. Rajeeva Kumar, Advocate, Ld.Ar & Md. Ghayas Uddin, Cit, (D/R) सुनवाई क" "त"थ/ : Aug 30Th, 2022 Date Of The Hearing Date Of Pronouncing The Order : Oct. 31 , 2022 Order Per Manish Borad: This Appeal Filed By The Assessee Pertaining To The Assessment Year (In Short “Ay”) 2015-16 Is Directed Against The Order Passed U/S 263 Of The Income Tax Act, 1961 (In Short The “Act”) By Ld. Pr. Commissioner Of Income-Tax-15, Kolkata [In Short Ld. “Pcit”] Dated 22.06.2020 Which Is Arising Out Of The Assessment Order Framed U/S 143(3) Of The Act Dated 25.05.2017. I.T.A. No.155/Kol/2021 Ay 2015-16 Sandeep Saraf-Huf 2. Registry Has Informed That The Appeal Is Time Barred By 247 Days. Condonation Application Has Been Filed By The Assessee( Which Is Available On Record). Perusal Of The Same Shows That The Delay Was On Account Of Covid-19 Restrictions. We, Therefore, In View Of The Judgment Of The Hon 'Ble Supreme Court Vide Miscellaneous Application No. 21 Of 2022 Find That The Limitation Period In Filing Appeal Between 15.03.2020 Till 28.02.2022 Has Been Excluded For Calculating The Limitation Period. Since The Period Of Limitation In The Case Of The Assessee Falls During This Period, The Same Deserves To Be Excluded & We, Therefore, Condone The Delay Of 247 Days & Admit The Appeal For Adjudication.

Section 10(38)Section 143Section 143(3)Section 14ASection 263

M/S. India Pistons Ltd., Chennai vs. ACIT, CC - 2(3), Chennai

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 3389/CHNY/2019[1999-2000]Status: DisposedITAT Chennai31 Oct 2022AY 1999-2000

Bench: Shri Mahavir Singhand Shri G. Manjunathaआयकरअपीलसं./Ita No.: 3389/Chny/2019 िनधा"रण वष"/Assessment Year: 1999-2000 India Pistons Ltd., The Acit, Huzur Gardens, Sembium, Vs. Corporate Circle-2(3), Perambur, Chennai Chennai – 600 011. Pan: Aaaci 1439E (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri Vikram Vijayaraghavan, Advocate ""यथ" क" ओर से/Respondent By : Shri P. Sajit Kumar, Jcit सुनवाई क" तार"ख/Date Of Hearing : 31.10.2022 घोषणा क" तार"ख/Date Of Pronouncement : 31.10.2022 आदेश /O R D E R Per Mahavir Singh: This Appeal By The Assessee Is Arising Out Of The Order Of The Commissioner Of Income Tax (Appeals)-6, Chennai, In Ita No.79/Cit(A)-6/2009-10 Dated 19.09.2019. The Assessment Was Framed By The Acit, Company Circle-Ii(3), Chennai For The Assessment Year 1999-2000 U/S.143(3) R.W.S. 263 Of The Income Tax Act, 1961 (Hereinafter The ‘Act’) Vide Order Dated 11.12.2009. 2. The First Issue In This Appeal Of Assessee Is As Regards To The Order Of Cit(A) Confirming The Action Of Ao In Disallowing The Pre- Operative Expenses Of Existing Business Claimed In Respect Of Expansion Of Existing Business At Sengundram, Chennai. For This, Assessee Has Raised Following Ground:- “Rejecting The Entire Claim Of Pre Operative Expenses Of Rs.2,89,03,774/- In Respect Of The Expansion Of The Existing Business At Sengundram, Chennai & Granting Deduction U/S.35D At 5%”

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri P. Sajit Kumar, JCIT
Section 115JSection 143(3)Section 35DSection 80I