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

Standard Industries Ltd, Mumbai vs. Principal Commissioner of Income Tax-3, Mumbai

In the result, on this appeal filed by the assessee stands dismissed

ITA 1886/MUM/2018[2013-14]Status: DisposedITAT Mumbai20 Feb 2020AY 2013-14

Bench: Shri Shamim Yahya, Am & Shri Ram Lal Negi, Jm आयकर अपील सं/ I.T.A. No.1886/Mum/2018 (निर्धारण वर्ा / Assessment Year:2013-14) Standard Industries Ltd. बिधम/ Pcit-3 59, The Arcade, 1St Floor, 612, Aayakar Bhavan, M. K. Vs. World Trade Centre, Cuffe Road, Mumbai-400020. Parade Colaba, Mumbai- 400005. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcs8888C (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee By: Mr. K. K. Ved Revenue By: Shri Ajay Kumar (Dr) सुनवाई की तारीख / Date Of Hearing: 17/12/2019 घोषणा की तारीख /Date Of Pronouncement: 20/02/2020 आदेश / O R D E R Per Shamim Yahya, Am: This Appeal Filed By The Assessee Is Directed Against The Order Of The Principal Commissioner Of Income Tax-3, Mumbai [Hereinafter Referred To As The “Pcit”] Dated 15/01/2018 & Pertains To A.Y.2013-14. 2. The Grounds Of Appeal Are As Under: - “The Appellant Objects To The Order Dated 15 January 2018 (Received On 25 January 2018) Passed By The Learned Principal Commissioner Of Income Tax -3 (Referred To As Cit), Mumbai Under Section 263 Of The Income-Tax Act. 1961 ('The Act') On The Following Grounds: I. Validity Of Order Under Section 263

For Appellant: Mr. K. K. VedFor Respondent: Shri Ajay Kumar (DR)
Section 143(3)Section 263Section 37

M/S Bhumi Nirman Pvt. Ltd., Kolkata vs. ITO, WD.-10(4), Kolkata

Appeal is allowed for statistical purposes in above terms

ITA 2321/KOL/2019[2012-13]Status: DisposedITAT Kolkata19 Feb 2020AY 2012-13

Bench: Shri S. S. Godara, Jm & Dr. A. L. Saini, Am आयकर अपीलसं/I.T.A No.2321/Kol/2019 ("नधा"रण वष" / Assessment Year: 2012-13) M/S Bhumi Nirman Private Vs. Ito, Ward-10(4), Kolkata. Limited C/O Rajesh Mohan & Associates, Unit No.18, 5Th Floor, Bagati House, 34, Ganesh Chandra Avenue, Kolkata- 700013. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aadcb8546L (Appellant) .. (Respondent) Appellant By : Shri S.M. Surana, Advocate Respondent By : Shri Ram Bilash Meena, Sr. Dr-Cit सुनवाई क" तार"ख/ Date Of Hearing : 27/01/2020 घोषणा क" तार"ख/Date Of Pronouncement : 19/02/2020 आदेश / O R D E R Per Shri S. S. Godara: This Assessee’S Appeal For Assessment Year 2012-13 Arises Against The Principal Commissioner Of Income Tax - 4, Kolkata’S Order Dated 26.03.2019 Involving Proceedings U/S 263 Of The Income Tax Act, 1961 (In Short ‘The Act’). Heard Both The Parties. Case File Perused. 2. It Transpires At The Outset That The Pcit’S Revision Order U/S 263 Of The Act Under Challenge Has Been Passed Ex Parte. Both The Parties Have Invited Our Attention To Para 3 Page 2 In The Impugned Revision Order Making It Clear That Not

For Appellant: Shri S.M. Surana, AdvocateFor Respondent: Shri Ram Bilash Meena, Sr. DR-CIT
Section 263

M/S Sun Flag Iron & Steel Co. Ltd., Nagpur vs. Principal Commissioner F Income Tax-2, Nagpur

In the result, the appeal of the assessee is allowed

ITA 217/NAG/2015[2011-12]Status: DisposedITAT Nagpur18 Feb 2020AY 2011-12

Bench: Shri D. Karunakara Rao, Am & Shri Partha Sarathi Chaudhury, Jm आयकर अपील सं. / Ita No.217/Nag/2015 िनधा"रण वष" / Assessment Year : 2011-12 Sun Flag Iron & Steel Co. Ltd., 33, Mount Road, Sadar, Nagpur-440001. .......अपीलाथ" / Appellant Pan : Aaccs3376C बनाम / V/S. Pr. Cit-2, ……""यथ" / Respondent Nagpur. Assessee By : Shri S. C. Thakur Revenue By : Shri U. U. Kasar सुनवाई क" तारीख / Date Of Hearing : 17.01.2020 घोषणा क" तारीख / Date Of Pronouncement : 18.02.2020 आदेश / Order Per D. Karunakara Rao, Am: This Appeal Is Filed By The Assessee Against The Order Of The Pr. Cit-2, Nagpur Dated 24.04.2015 For The Assessment Year 2011-12. 2. The Grounds Raised By The Assessee Are As Under :- “1] Learned C.I.T. Erred In Passing An Order U/S. 263. The Assessment Order Was Neither Erroneous Nor Prejudicial To The Interest Of Revenue & Hence C.I.T. Had No Jurisdiction To Revise The Same U/S. 263. 2] Learned C.I.T. Erred In Observing That The Assessee Claimed Excessive Deduction Amounting To Rs.2,30,41,897/- U/S. 80Ia. Credit Given By Msedcl Of Rs.2,30,41,897/- Was On Account Of Power Supplied By The Assessee’S Power Plant & Banked With Msedcl & Hence It Was An Income Of Power Plant Eligible For Deduction U/S. 80Ia.

For Appellant: Shri S. C. ThakurFor Respondent: Shri U. U. Kasar
Section 263Section 80I