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

M/S. Aic Iron Industries Pvt. Ltd., Kolkata vs. Pr.CIT-1, Kolkata

Appeal is allowed

ITA 1332/KOL/2019[2014-15]Status: DisposedITAT Kolkata31 Dec 2019AY 2014-15

Bench: Shri S. S. Godara, Jm & Dr. A. L. Saini, Am आयकर अपीलसं./I.T.A No.1332/Kol/2019 ("नधा"रण वष" / Assessment Year: 2014-15) Aic Iron Industries Pvt. Ltd. Vs. Pcit-1, Kolkata 25, Ganesh Chandra Avenue, 4Th Floor, Kolkata – 700013. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaccn0217F (Appellant) .. (Respondent) Appellant By : Shri Sunil Surana, Fca Respondent By : Shri Radhey Shyam, Cit सुनवाईक"तार"ख/ Date Of Hearing : 16/12/2019 घोषणाक"तार"ख/Date Of Pronouncement : 31/12/2019 आदेश / O R D E R Per Shri S. S. Godara: This Assessee’S Appeal For Assessment Year 2014-15 Arises Against The Principal Commissioner Of Income Tax (A), Kolkata Dated 12.03.2019 Involving Proceedings U/S 263 Of The Income Tax Act, 1961 (In Short ‘The Act’). Heard Both The Parties. Case File Perused. 2. Relevant Facts Involved In The Instant Lis Are In A Very Narrow Compass. The Assessing Officer Has Framed His Regular Assessment In Issue Dated 19.12.16 Disallowing Administrative Expenditure Of Rs.46,420/- Under Rule 8D(2)(Iii) R.W. Section 14A Of The Act. The Pcit Assumed His Revision Jurisdiction Terming The Above Regular Assessment As Erroneous Causing Prejudice To Interest Of The Revenue Since There Were ‘Large Specific Domestic Transactions” & The Assessing Officer Had Completed His Assessment Without Making Any Reference To The Tpo To Determine Arm’S Length Price Thereof. He Quotes Cbdt Instruction No.3/2016 Dated 10.03.16 Regarding Guidelines For Implementation Of Transfer Pricing

For Appellant: Shri Sunil Surana, FCAFor Respondent: Shri Radhey Shyam, CIT
Section 14ASection 263Section 40

The Mayurbhanj Central Co-Operative Bank Limited, Mayurbhanj vs. Principal CIT, Cuttack

In the result, appeal of the assessee is dismissed

ITA 267/CTK/2018[2013-14]Status: DisposedITAT Cuttack23 Dec 2019AY 2013-14

Bench: Shri C.M. Garg, Jm & Shri L.P. Sahu, Am आयकर अपीऱ सं./Ita No.267/Ctk/2018 (नििाारण वषा / Assessment Year :2013-2014) M/S The Mayurbhanj Central Vs. Ito, Ward-1, Baripada Cooperative Bank Limited, At/Po: Baripada, Mayurbhanj स्थायी लेखा सं./Panno. : Aaaam 7185 J (अऩीलाथी /Appellant) (प्रत्यथी / Respondent) .. ननधाारिती की ओर से /Assessee By : Shri Ambika Prasad Mohanty,Ca िाजस्व की ओर से /Revenue By : Shri Subhendu Dutta, Dr सुनवाई की तािीख / Date Of Hearing : 07/11/2019 घोषणा की तािीख/Date Of Pronouncement : 23/12/2019 आदेश / O R D E R Per L.P.Sahu, Am: This Is An Appeal Filed By The Assessee Against The Order Of Pr. Cit, Cuttack Dated 30.03.2018 For The Assessment Year 2013-2014. 2. As Per The Office Note/Order Sheet Entry, The Appeal Of The Assessee Is Barred By 18 Days. In This Regard, The Ld. Ar Of The Assessee Has Filed An Application For Condonation Of Delay Along With An Affidavit Stating Therein The Sufficient Reasons For Delay In Filing The Present Appeal. On The Other Hand, Ld. Dr Did Not Object To Condone The Delay. We Have Also Gone Through The Said Application Along With The Affidavit Filed By The Assessee Explaining The Sufficient Reasons For Delay. Considering The Application Along With The Affidavit Of The Assessee For 2 Condonation Of Delay, We Condone The Delay In Filing The Appeal & The Appeal Is Heard Finally.

For Appellant: Shri Ambika Prasad Mohanty,CAFor Respondent: Shri Subhendu Dutta, DR
Section 143(3)Section 263