- 1 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 57852 OF 2015 (T-IT) C/W WRIT PETITION NO. 4562 OF 2016 (T-IT) IN WP No. 57852/2015 BETWEEN: M/S KARNATAKA SOAPS AND DETERGENTS LTD P.B. NO.5531 BANGALROE-PUNE HIGHWAY RAJAJINAGAR, BANGALORE-560 055 REPRESENTED BY ASSISTANT GENERAL MANAGER …PETITIONER (BY SRI. ASHOK A. KULKARNI, ADVOCATE) AND: 1. THE COMMISSIONER OF INCOME T AX LARGE TAX PAYERS UNIT (LTU) JSS TOWERS, 100FT RING ROAD, BANASHANKARI 3RD STAGE BANGALORE-560 085. 2. THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE MINISTRY OF FINANCE NORTH BLOCK NEW DELHI-110 001 REPRESETNED BY ITS SECRETARY Digitally signed by VANAMALA N Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 3. THE DEPUTY COMMISSIOENR OF INCOME TAX LARGE TAX PAYERS UNIT (LTU) JSS TOWERS, 100FT RING ROAD BANASHANKARI 3RD STAGE, BANGALORE-560 085. …RESPONDENTS (BY SRI. RAVI RAJ Y V., SENIOR STANDING ADVOCATE) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DTD 31.3.2015 IN ANNEXURE-E OF THE R-1 IN SO FAR AS THE ASSESSMENT YEAR 1998-99; DIRECT IN THE NATURE OF MANDAMUS OR OTHERWISE TO THE R1 DIRECTING HIM TO CONDONE THE DELAY IN FILING OF AND DEAL ON MERITS WITH THE REVISION PETITION DTD13.11.2013 IN ANNEXURE- A; QUASH THE COMMUNICATION DTD19.6.2015 IN ANNEXURE-F IN WP NO. 4562/2016 BETWEEN: 1. M/S KARNATAKA SOAPS AND DETERGENTS LTD P.B. NO.5531 BANGALORE-PUNE HIGHWAY RAJAJINAGAR BANGALORE-560 055 REPRESENTED BY ASSISTANT GENERAL MANAGER SHRI. ANIL RAMPAL ...PETITIONER (BY SRI. ASHOK A KULKARNI, ADVOCATE) AND: 1. THE COMMISSIONER OF INCOME TAX - 3 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 LARGE TAX PAYERS UNIT (LTU) JSS TOWERS, 100FT RING ROAD BANASHANKARI 3RD STAGE BANGALORE-560 085. 2. THE CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE MINISTRY OF FINANCE NORTH BLOCK NEW DELHI-110 001 REPRESENTED BY ITS SECRETARY 3. THE DEPUTY COMMISSIONER OF INCOME TA LARGE AX PAYERS UNIT (LTU) JSS TOWERS, 100FT RING ROAD BANASHANKARI 3RD STAGE BANGALORE-560 085. ...RESPONDENTS (BY SRI. RAVI RAJ Y V., SENIOR STANDING COUNSEL) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER U/S.264 DTD.31.3.2015 IN ANNEX-E OF THE R-1 IN SO FAR AS THE ASSESSMENT YEAR 2001-02; ISSUE AN APPROPRIATE WRIT, ORDER OR DIRECTION IN THE NATURE OF MANDAMUS OR OTHERWISE TO THE R-1 DIRECTING HIM TO CONDONE THE DELAY IN FILING OF AND DEAL ON MERITS WITH THE REVISION PETITION DTD.13.11.2013 IN ANNEX-A; QUASH THE COMMUNICATION DTD.19.6.2015 IN ANNEX-F. THESE PETITIONS, COMING ON FOR FINAL HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 4 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 CORAM: HON'BLE MR JUSTICE B M SHYAM PRASAD ORAL ORDER The petitioner has called in question the orders, relevant to the assessment years 1998 -1999 and 2001-2002, by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 [for short, 'the IT Act'] and the Central Board of Direct Taxes [for short, 'the CBDT'] under Section 119(2)(b) of the IT Act. The petitioner has had the advantage of a Rehabilitation Scheme approved on 06.09.1996 by the Board for Industrial and Financial Reconstruction [BIFR] for converting accrued interest on a loan to a long-term loan on the condition that it must be returned in four instalments. 2. The petitioner's grievance with the aforesaid orders, which are called in question in these petitions, stem from the following undisputed facts; - 5 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 a. The petitioner was declared a sick industry because of its failure to discharge certain loans, but the BIFR has approved a Rehabilitation Scheme permitting conversion of the accrued interest to a long-term loan with liberty to discharge in instalments. b. The petitioner could not seek allowance on this long-term loan for the Assessment Year 1997-1998 because of the retrospective change in the law vide amendment to Section 43B of the Finance Act, 2006. The last orders in this regard are on 13.02.2012. c. The petitioner has discharged this long- term loan in instalments in the financial years relevant to the Assessment Years 1998-1999, 1999-2000, 2000-2001 and 2001-2002. - 6 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 d. In the meantime, the petitioner had filed returns for these four assessment years and had also accepted acknowledgment of the returns so far, but without claiming the benefit on the interest that is converted as a long-term loan in terms of the Rehabilitation Scheme approved by BIFR. e. The petitioner, because the loan is discharged, is indisputably entitled to claim allowance on the discharge of this long-term loan under Section 43B of the Act. f. The petitioner has filed a revision under Section 264 of the IT Act for leave to revise the acknowledgment of return under Section 143(1) of the IT Act for the Assessment Years 1998 - 1999 and 2001-2002 and the Assessment Orders under Section 143(3) of the IT Act for the - 7 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 Assessment Years 1999 - 2000 and 2000 - 2001. 3. The Commissioner of Income Tax, by the impugned order dated 13.11.2013, has refused to interfere with the prayer for the Assessment Years 1999 - 2000 and 2000 - 2001 because these Assessment Orders under Section 143(3) of the IT Act are subject to appeal before the Appellate Authority. In fact, Mr. Ashok A. Kulkarni, the learned counsel for the petitioner, submits that the petitioner in these petitions does not pursue the grievance as against the rejection of both the revision under Section 264 and the application under Section 119(2)(b) of the IT Act for the Assessment Years 1999 - 2000 and 2000 - 2001 as the Assessment Orders are subject of appeals and that the petitioner has confined the grievance to the rejection of the revision and the application for the relevant Assessment Years 1998 - 1999 and 2001 - 2002. - 8 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 4. The petitioner's grievance with the orders under Section 264 of the IT Act is examined in the light of these circumstances, and the Commissioner has reasoned thus to reject the revision for the aforesaid two years: "The submission of the assessee dated 27-3- 2015 is taken on record and considered in the wake of the provisions U/s 264 of the Income Tax Act. As submitted by the assessee, the assessee has sought alternative measure of approaching the Board seeking condonation of delay for admission of this petition and hence has requested to keep the revision petition filed on 13-11-2013 pending without passing any order U/s 264. The contention of the assessee that there is no compulsion for passing an order is not acceptable. There is no provision under the Act to keep the proceedings pending beyond the due date prescribed to pass an order under the statute. Hence it is held that passing of an order U/s 264 is binding as per law." The underlining is by this Court - 9 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 5. The petitioner has pursued its remedy under Section 119(2)(b) of the IT Act with the CBDT, and the Board, without elaboration, by its order dated 19.06.2015, has opined that the application for condonation of delay is not maintainable. The CBDT has only observed that the application is not maintainable because the orders are subject of an appeal, but that would be relevant for the years 1999 - 2000 and 2000 - 2001. This reason will not be relevant for the Assessment Years 1998 - 1999 and 2001 - 2002. This Court, with the petitioner giving up the grievance for the Assessment Years 1999 - 2000 and 2000 - 2001, is examining the petitioner’s grievance relevant to the Assessment Years 1998 - 1999 and 2001 - 2002. 6. Mr. Ashok A. Kulkarni submits that this Court must definitely interfere with the opinion that the revision under Section 264 of the IT Act is not maintainable because the intimation of acceptance - 10 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 under Section 143 of the IT Act would be an order as contemplated under Section 264 of the IT Act. The learned counsel invites this Court's attention to the Explanation to Section 143 of the IT Act, which was on the statute book as of this Assessment Year. This Explanation, as is pointed out by Mr. Ashok A. Kulkarni, reads that an intimation sent to the Assessing Officer under Sub-section (1) or under Sub-section 1(B) shall be deemed to be an order for Sections 246 and 264 of the IT Act. The learned counsel places on record that this Explanation, along with Sub-clause (5), is deleted with retrospective effect by the Finance Act, 1999. 7. Mr. Raviraj Y. V., the learned Senior standing Counsel for the respondents, is heard in the light of this canvass. The learned Senior standing counsel cannot dispute this change in law and the consequential import that if the intimation of returns under Section 143 of the IT Act by operation of law is - 11 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 deemed to be an order for Section 264 of the IT Act, this Court must hold that the Commissioner of Income Tax [because of the Explanation to Section 143 of the IT Act relevant to the assessment year 1998- 1999 was on the statute] could not have rejected the revision insofar as the Assessment Year 1998 - 1999. 8. Mr. Ashok A. Kulkarni, for the next Assessment Year 2001 - 2002, submits that the expression "any order" as found in Section 264 of the IT Act must receive a wider interpretation notwithstanding the change that is brought by the Finance Act, 1999 by deletion of the Explanation to Section 143 of the IT Act, and if the expression "any order" is construed widely, even an intimation under Section 143 of the IT Act must be construed to be an order. The learned counsel proposes to rely upon a set of decisions by different High Courts to make this point. - 12 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 9. Mr. Raviraj Y. V. submits that this Court may consider addressing the petitioner's grievance deciding on the merits of the CBDT's order rejecting the application on the ground of delay leaving open whether a revision will lie in certain circumstances. The learned counsel submits that this submission is given the peculiar circumstances of the case where the Revenue does not dispute that the petitioner has had the advantage of discharging accrued interest converted as a long-term loan in four instalments and that such liability is discharged in four instalments and two of such instalments have been paid during the relevant Assessment Years. 10. This Court has considered these submissions and is of the opinion that if the petitioner's grievance in the peculiarities could be addressed examining the question of limitation and condoning the delay seeking leave to file the revised returns, the larger question, which may have a wider - 13 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 import, could be left open to be decided in an appropriate case. Therefore, such question is accordingly left open, and the merits of the petitioner's grievance with the CBDT's order rejecting its application for consideration for the Assessment Year 2001 - 2002 is considered. 11. At the outset, this Court must observe that the CBDT should have examined the peculiarities of the case instead of perfunctorily closing the application observing that the application is found to be not maintainable. The petitioner has pursued its grievance as against the refusal of allowance towards interest converted to a long-term loan in the Assessment Year 1997 - 1998 [without actually paying/repaying] in prosecuting appeals both on remand and otherwise with the Division Bench of this Court concluding vide its order dated 13.02.2012 that the petitioner will not be entitled to - 14 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 claim an allowance in view of the amendment to Section 43B of the IT Act. 12. The petitioner has prosecuted a certain recourse bonafide in law until February 2012 and in the meanwhile, the petitioner has discharged the long-term loan. The petitioner has not foreclosed the right to seek revision in the returns filed without claiming allowance because of the pending proceedings. This Court is of the view that sufficient cause is shown and the delay must be condoned in seeking the application to file revised returns for the Assessment Year 2001 - 2002. As such, there must be interference setting aside the CBDT's order dated 19.06.2015 insofar as the Assessment Years 1998 - 1999 and 2001 - 2002 observing that the Commissioner's order in the appeal for these relevant years cannot be a contra condition to the petitioner applying for revision of the returns filed. In the light of the afore, following: - 15 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 ORDER The petitions are allowed-in-part on the following terms: a. The Commissioner's order dated 31.03.2015 relevant to the Assessment Year 1998 - 1999 is set aside observing that the petitioner cannot be affected by the CBDT's order dated 19.06.2015 relevant to this Assessment Year. b. The CBDT's order dated 19.06.2015 relevant to the Assessment Year 2001 - 2002 is set aside condoning the delay and permitting the petitioner to file revised returns for this year observing that the petitioner's right to file such revision will not be affected by the Commissioner's order relevant to this year. - 16 - HC-KAR NC: 2025:KHC:19258 WP No. 57852 of 2015 C/W WP No. 4562 of 2016 c. In terms of this order, the petitioner will be at liberty to file revised returns within thirty [30] days from the date of receipt of a certified copy of this order. Sd/- (B M SHYAM PRASAD) JUDGE RB