Supreme Court Dismisses Revenue’s SLP Against Delhi HC Order in Vetco Gray Case [Read Order]

The Supreme Court has dismissed a Special Leave Petition filed by the Revenue against a judgment of the Delhi High Court which had rejected an appeal arising from revisionary proceedings under Section 263 of the Income Tax Act, 1961. The Apex Court found no merit in the challenge and declined to interfere with the impugned order.

The Special Leave Petition was filed by The Commissioner of Income Tax (International Taxation-3) against Vetco Gray Pte. Ltd., challenging the Delhi High Court’s order dated December 12, 2024 passed in ITA No. 571 of 2024. The High Court had dismissed the Revenue’s appeal holding that no substantial question of law arose for consideration.

Relating to AY 2017-18, the AO had completed assessment under Section 143(3) read with Section 144C(3) of the Act, where part of the offshore supply receipts were attributed to the assessee’s permanent establishment in India. The Commissioner then invoked revisionary jurisdiction under Section 263 and held the assessment order to be prejudicial to the interests of the Revenue. Further, 25% of the income was attributed to assessee’s PE.

The revisionary order passed under Section 263 was challenged by Vetco Gray Pte. Ltd. before the ITAT, which set aside the Commissioner’s order. An appeal filed by the Revenue against that ITAT order was also dismissed by the Delhi High Court. Despite this, the Assessing Officer passed a subsequent order giving effect to the already set aside Section 263 order.

While dismissing the Revenue’s appeal in ITA No. 571 of 2024, the Delhi High Court held that once the Section 263 order had been quashed, any consequential assessment order passed could not survive. The Court further observed that the appeal did not raise any substantial question of law.

The Supreme Court Bench, comprising  Justice J.B. Pardiwala and Justice Sandeep Mehta, condoned the delay in filing the Special Leave Petition. Ultimately, the SLP was dismissed as there was no reasonable ground to interfere with the impugned judgment.

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