Facts of the Case

The petitioner, Shangri-La International Hotel Management Pte. Ltd., filed a writ petition challenging an order dated 26.03.2025 passed by the Commissioner of Income-Tax (International Tax)-3 under Section 264 of the Income-tax Act, 1961 for Assessment Year 2021-22. The petitioner had filed an application dated 28.04.2023 seeking revision of an intimation/order dated 28.04.2022 issued under Section 143(1). The Commissioner accepted that the revision petition under Section 264 was maintainable, relying on precedents of the Delhi High Court, but denied relief on the ground that the issue involved was pending consideration before the Supreme Court in CIT vs Sheraton International Inc.

Issues Involved

Whether rejection of relief under Section 264 on the ground that a similar issue is pending before the Supreme Court was justified, whether revision under Section 264 is maintainable against an intimation under Section 143(1), and whether the petitioner was entitled to refund and consequential relief when the issue stood covered by binding Delhi High Court precedents.

Petitioner’s Arguments

The petitioner contended that the issue was squarely covered in its favour by binding decisions of the Delhi High Court, including Vijay Gupta vs CIT, EPCOS Electronic Components S.A. vs Union of India, Sheraton International Inc., Starwood Hotels & Resorts Worldwide Inc., and even earlier decisions in the petitioner’s own case. It was argued that mere pendency of an SLP could not be a valid ground to deny relief, particularly when the SLP itself had been closed on account of low tax effect.

Respondent’s Arguments

The Revenue relied on the impugned order passed under Section 264 and submitted that relief was withheld because the issue arising from Sheraton International Inc. was pending before the Supreme Court, and therefore consequential benefit ought not to be granted.

Court Order / Findings

The Delhi High Court held that the reasoning adopted by the Commissioner in denying relief was clearly misplaced. The Court observed that the issue was concededly covered by binding decisions of the Delhi High Court, including Sheraton International Inc., Starwood Hotels & Resorts Worldwide Inc., and earlier judgments rendered in the petitioner’s own case. The Court reiterated that mere pendency of proceedings before the Supreme Court does not dilute the binding nature of High Court judgments, particularly when no stay operates. The Court held that the petitioner’s case deserved identical treatment as earlier decisions and that denial of relief under Section 264 was unsustainable.

Important Clarification

The Court clarified that revision under Section 264 is maintainable against an intimation under Section 143(1) and that authorities cannot deny relief merely on the ground that a similar issue is pending before the Supreme Court, when the field is otherwise occupied by binding High Court precedent.

Final Outcome

The writ petition was allowed. The order dated 26.03.2025 passed under Section 264 for Assessment Year 2021-22 was set aside, the revision application dated 28.04.2023 was allowed, and the Commissioner was directed to take consequential action in accordance with law, including grant of refund and applicable interest.

Link to Download order- https://mytaxexpert.co.in/uploads/1769503115_SHANGRILAINTERNATIONALHOTELMANAGEMENTPTE.LTD.VsCOMMISSIONEROFINCOMETAXINTERNATIONALTAX3DELHIORS..pdf

 

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