Bremco Corporation v. Commissioner Of Income-Tax — 1989 DIGILAW 644 (ALL)

JUDGMENT K.C. Agrawal, Actg. C.J. 1. This petition under Article 226 of the Constitution has been filed by Bremco Corporation for quashing of the order dated June 13, 1979, passed by the Commissioner of Income-tax rejecting the application of the petitioner filed under Section 264 of the Income-tax Act. 2. The petitioner is carrying on a business in manufacturing harness and saddlery goods and exports the same. In the assessment year 1976-77, the petitioner disclosed an income of Rs. 2,06,450. It claimed Rs. 41,689.16 as export expenses under Section 35B of the Income-tax Act. 3. On October 3, 1977, the Income-tax Officer, Circle-II(2), Kanpur, made an assessment under Section 143(3) on a total income of Rs. 2,16,060. The Income-tax Officer held that the share allocation will be as under : Rs. Total income 2,16,060 Less Firm 41,639 tax 1,74,421 4. The order of the Income-tax Officer became final. In 1979, the petitioner moved an application under Section 264 of the Income-tax Act claiming rebate of Rs. 5,75,153.68 under Section 35B on the ground that under legal advice, it was entitled to weighted deduction on export markets development expenditure amounting to Rs. 5,75,154. The Income-tax Officer had wrongly allowed deduction only of Rs. 33,807. The petitioner pleaded that the assessment order was since prejudicial to its interest, the same was liable to be revised under Section 264 (1) and the entire claim was to be allowed to it. The application was rejected by the Commissioner of Income-tax by the impugned judgment and order dated June 13, 1979, on the ground that as the claim made by the petitioner under Section 35B had been allowed by the Income-tax Officer on an agreed basis, a fresh claim could not be entertained. His view was that there was no justification for the grievance of the petitioner for being allowed more as weighted deduction. 5. Against the aforesaid order, the present writ petition has been filed. 6. Section 264(1) of the Income-tax Act confers revisional power on the Commissioner of Income-tax in exercise of which the Commissioner of Income-tax can call for the record of any proceeding decided by an officer subordinate to him on his own motion or on an application filed to that effect before him. 6. Section 264(1) of the Income-tax Act confers revisional power on the Commissioner of Income-tax in exercise of which the Commissioner of Income-tax can call for the record of any proceeding decided by an officer subordinate to him on his own motion or on an application filed to that effect before him. He has been conferred the power to pass any such order in place of the previous one which is found by him to be prejudicial to the assessee. The Commissioner's revisional jurisdiction under this section is "subject to the provisions of this Act". He has the discretion to grant or refuse relief. His discretion is not arbitrary, vague and fanciful. 8. In the instant case, the Commissioner of Income-tax found that weighted deduction had been allowed to the petitioner according to its own agreement. On account of the agreement, the claim of the petitioner was not examined. The petitioner could not be heard complaining against the correctness of the order on the ground that the same was prejudicial to its interest. Neither before the Commissioner of Income-tax nor before us, the petitioner has made out a case that it was entitled to the weighted deduction of Rs. 5,75,154. The claim for deduction was vague, the same being based on the decisions of the Income-tax Appellate Tribunals given by Bombay, Calcutta and Allahabad. The petitioner's counsel could not cite any law of any High Court or of the Supreme Court in support of the claim now made through the application under SECTION 264. In Karamchand Premchand (P.) Ltd. v. C1T [1975] 101 ITR 46 (Guj), the application filed under Section 264 of the Income-tax Act was rejected on the ground of limitation. This order was reversed by the Guja-rat High Court in a writ petition on the finding that there being sufficient cause, the case was eminently a fit one in which jurisdiction of the High Court under Article 226 could be effectively exercised. The High Court did not go into the merits of the grounds on which Section 264 had been invoked. We, therefore, find no support from this decision which could assist the petitioner in convincing us that the application under Section 264 should have been allowed on merits. The Gujarat High Court advisedly did not express any opinion on merits of the application. 7. We, therefore, find no support from this decision which could assist the petitioner in convincing us that the application under Section 264 should have been allowed on merits. The Gujarat High Court advisedly did not express any opinion on merits of the application. 7. As mentioned above, the contention of the petitioner's counsel was that the power conferred on the Commissioner of Income-tax was blanket in nature and, as such, no inhibition being there, the application ought to have been considered on merits. To that extent, we are not prepared to go with the assessee. All the jurisdictions, blanket in nature, have to be carefully exercised and only when the ends of justice require it to be so done that the Court is expected to exercise the power. 8. In Parekh Brothers v. CIT [1984] 150 ITR 105, a Division Bench of the Kerala High Court had an occasion to deal with the scope of Section 264 of the INcome-tax Act. It held (at page 119) : "The limitations implicit in the exercise of such power are well known. The jurisdiction is discretionary. Whether in a particular case, on the basis of facts disclosed, the Commissioner will exercise his jurisdiction and interfere in the matter, is a matter of discretion. It is certainly a judicial discretion vested in the Commissioner, to be exercised in accordance with law. We are not called upon to pronounce on the scope and amplitude of the revisional power." Learned counsel for the petitioner was unable to show to us that the Commissioner of Income-tax committed an error apparent on face of the record in rejecting the application under Section 264. He did not take into account any irrelevant ground while rejecting the application. The discretion was exercised in accordance with established principles of law. 9. As to what is the jurisdiction of this court, while making a judicial review under Article 226 of the Constitution, has been considered by the Supreme Court in State of V. P. v. Dharmandar Prasad Singh (Maharaja), AIR 1989 SC 997 . The Supreme Court says in this regard that (headnote) : "Judicial review under Article 226 cannot converted into an appeal. Judicial review is directed not against the decision, but is confined to the examination of the decision-making process. The Supreme Court says in this regard that (headnote) : "Judicial review under Article 226 cannot converted into an appeal. Judicial review is directed not against the decision, but is confined to the examination of the decision-making process. When the issue raised in judicial review is whether a decision is vitiated by taking into account irrelevant, or neglecting to take into account of relevant factors or is so manifestly unreasonable that no reasonable authority, entrusted with the power in question could reasonably have made such a decision, the judicial review of the decision-making process includes examination, as a matter of law, of the relevant of the factors." 10. On the facts and in the circumstances of the present case, the petitioner has not been able to satisfy us that the rejection of the application by the Commissioner of Income-tax was arbitrary. In the result, the writ petition fails and is dismissed. No costs.