HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Civil Appeal Nos. 143-144 of 2013 / Civil Appeal Nos. 139-140 of 2013 / Civil Appeal Nos. 141-142 of 2013 / Civil Appeal Nos. 137-138 of 2013
2026 INSC 1018 ·
263
Two-judge bench · S.V.N. Bhatti, J. · N.V. Anjaria, J.
Assessment years: 2000-01, 2001-02
Orient Crafts manufactured and exported garments. In the AY 2001-02 example used by the Court, it included export-quota sale premium in business profits and claimed an export deduction. The Assessing Officer accepted the claim in scrutiny assessment. The Commissioner revised under section 263, treating the failure to exclude 90% of quota premium under Explanation (baa) as erroneous and prejudicial to Revenue. The Tribunal set aside revision and consequential proceedings, but the Delhi High Court reversed. The Supreme Court batch covered AYs 2000-01 and 2001-02; arguments there were confined to section 263.
Source: official signed judgment / paragraphs 1-6 / PDF pages 1, 2, 3, 4, 5, 6
The Court restated that error and prejudice must coexist; disagreement with a legally permissible view is insufficient, while an unsustainable view or absence of application of mind can attract revision. It then examined whether the High Court had actually addressed the Tribunal’s reasons. It found that the High Court had considered the disputed export-incentive treatment, the Commissioner’s jurisdiction and the limits of the CBDT memorandum’s effect before a court. The High Court had recorded a tenable basis for upholding revision. The Supreme Court rejected the contention that those aspects had been ignored and declined a remand.
Source: official signed judgment / paragraphs 11-15 / PDF pages 8, 9, 10, 11, 12
The Court declined to interfere with the High Court judgment. The lead and accompanying appeals were dismissed for the same reasons, with no costs.
Source: official signed judgment / paragraphs 15-17 / PDF pages 11, 12
In whose favour: Revenue
All eight assessee appeals dismissed; no costs
Section 263 jurisdictional challenge rejected in the scope argued
The Supreme Court expressly confined the arguments to section 263. The separate Samtex judgment in the same PDF considers the quota-premium deduction contention.
Source: official signed judgment / paragraphs 15-17 / PDF pages 11, 12
For a revision challenge, identify both statutory conditions and the precise inquiry or legal view taken in the original assessment. Distinguish an argument that the High Court failed to consider the Tribunal’s reasons from a fresh substantive deduction claim. The case concerns the old statutory regime and does not certify present section 263 standards or revive section 80HHC deductions. Read the separate Samtex judgment only for the issues actually argued there.
Source: official signed judgment / paragraphs 2,11-16 / PDF pages 2, 8, 9, 10, 11, 12
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Supreme Court · 18 September 2026 · 2026 INSC 1018
Case: Orient Crafts Ltd. v. Commissioner of Income Tax, New Delhi, Civil Appeal Nos. 143–144 of 2013 and connected appeals. Bench: Justices S. V. N. Bhatti and N. V. Anjaria.
Orient Crafts, a manufacturer and exporter of readymade garments, included ₹73,49,341 received from sale of surplus export quota in its business-profit computation while claiming deduction under section 80HHC for assessment year 2001–02. The assessment was completed after considering a CBDT office memorandum dated 23 February 1998; the Commissioner later invoked section 263.
Whether the export-quota premium received the claimed section 80HHC treatment under the assessment-year-specific provisions, and whether the assessment order could be revised as both erroneous and prejudicial to the interests of the Revenue under section 263.
The Supreme Court dismissed the assessee's appeals and declined to interfere with the High Court's conclusion sustaining revision. It treated the statutory scheme—not the administrative memorandum—as controlling and reiterated that both error and prejudice must coexist for section 263.
A CBDT circular or office memorandum may bind departmental officers within its lawful field, but it does not bind a court interpreting the Act and cannot override statutory text. The receipt and deduction therefore had to be tested under the applicable sections 28 and 80HHC rather than resolved by the memorandum alone.
