Supreme Court Declines To Interfere With Calcutta High Court IT Order Favouring Britannia
Kirit Singhania
22 April 2026 10:21 AM IST
The Supreme Court on Tuesday refused to interfere with a tax department plea against Britannia Industries Ltd, upholding a Calcutta High Court ruling that had set aside a Income Tax revision order. The dispute concerned the valuation of property acquired by the company and deductions claimed for statutory dues such as taxes.
A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe, while declining to interfere with the High Court's order, kept the interpretation of Section 56(2)(x) of the Income Tax Act, which deals with taxation of property received for inadequate consideration and Section 43B, which allows deductions only on actual payment basis, open for consideration in an appropriate case. The court observed:
“While we are not inclined to interfere with the Special Leave Petition against the judgment and order passed by the High Court, the interpretation of the High Court on Section 56(2)(x) coupled with Section 43-B of the Income Tax Act, 1961 is kept open for being considered in an appropriate case.”
The High Court had held that Section 263 could not be invoked as the twin conditions of “error” and “prejudice to revenue” were not satisfied. It found that the Assessing Officer had already examined the issues, that Section 56(2)(x) was not applicable due to the timing of the transaction, and that disallowance under Section 43B would result in impermissible double taxation.
The dispute pertained to assessment year 2018-19, where Britannia had acquired land and building through agreements dated December 31, 2016 and September 6, 2017, with registration completed in 2017-18. The assessment was completed on March 22, 2021.
Subsequently, the PCIT issued a show cause notice on November 30, 2022 under Section 263 and passed a revision order on March 29, 2023 alleging lack of inquiry, undervaluation of property. The Revenue had pointed to a valuation difference of about Rs. 89 crore between the transaction value and stamp duty value and also disputed deductions of over Rs.10 crore claimed towards statutory dues.
Britannia challenged the revision before the ITAT, which, by order dated March 6, 2024 allowed the appeal and set aside the PCIT's order. The High Court affirmed this view, leading to the present appeal, which has now been dismissed by the Supreme Court.
For Petitioner: N Venkataraman, A.S.G, Advocates Venkataraman Chandrashekhara Bharathi, Pankhuri Srivastava, B K Satija, Amit Sharma V, Sudarshan Lamba, AOR