SMEC India (P.) Ltd. Vs PCIT (Delhi High Court)
Delhi High Court held that suo moto disallowance with bona fide yet mistaken belief that amount is liable to be offered for taxation, such mistake can be rectified via revision application under section 264 of the Income Tax Act.
Facts- The writ petitioner impugns the order passed by the Principal Commissioner dated 25 March 2019 and in terms of which it has proceeded to dismiss an application that had been instituted by the petitioner purporting to be u/s. 264 of the Income Tax Act, 1961.
The dispute itself arose in the context of an amount of INR 4,75,00,000/- which was paid by the petitioner on account of reimbursement of expenses incurred by its Associate Enterprise and on which it had not deducted tax at source. According to the writ petitioner, it had at the time of furnishing its Return of Income for the concerned Assessment Year, namely, 2014-15 incorrectly proceeded on the assumption that since the aforesaid remittance was liable to be subjected to tax and no tax thereon had in fact been deducted, it would be liable to be disallowed by virtue of the provisions of Section 40(a)(i) of the Act. Proceeding on that premise, the petitioner had thus suo moto disallowed the same and added the remittance back in its computation of income.
