Refusal to Follow Jurisdictional High Court Decision due to Pending Supreme Court Appeal is Invalid

Issue

Whether the Commissioner (under Section 264) can refuse to grant relief to an assessee by ignoring a binding decision of the jurisdictional High Court (in CIT v. Sheraton International Inc.) solely on the ground that the Department has challenged said decision in the Supreme Court and the matter is “pending consideration.”

Facts

Assessment Year: 2021-22.
The Event: The petitioner received an intimation under Section 143(1).
The Remedy: The petitioner filed a revision application under Section 264 seeking revision of the intimation and a refund with interest.
The Rejection: The Commissioner accepted that the revision petition was maintainable but refused relief. The sole reason given was that the favorable Delhi High Court judgment relied upon by the assessee (CIT v. Sheraton International Inc.) was challenged by the Revenue and was pending before the Supreme Court.

Decision

Binding Precedent: The Court held that the decision of a jurisdictional High Court is binding on all lower authorities (including the Commissioner) within its jurisdiction.
Pendency is Not a Stay: Merely because an appeal against a High Court order is pending before the Supreme Court, it does not mean the High Court order is inoperative. Unless the Supreme Court has specifically stayed the operation of the High Court judgment, the lower authorities are bound to follow it.
Judicial Discipline: Refusing to follow a binding High Court judgment on the pretext of a pending appeal amounts to a breach of judicial discipline.
Ruling: The Commissioner’s order was set aside. Since the issue was covered in the assessee’s favor by the Sheraton International Inc. judgment, the revision application was allowed.

Key Takeaways

Pendency vs. Stay: This is a crucial distinction in tax litigation. If you cite a favorable High Court judgment and the Officer says, “We have appealed this to the Supreme Court,” you must immediately ask, “Is there a Stay Order?” If there is no stay, they must follow the High Court ruling.

Section 264 Scope: This case also reaffirms that a Revision Petition under Section 264 is a valid remedy against an Intimation under Section 143(1), provided you file it within one year.

HIGH COURT OF DELHI

Shangri-La International Hotel Management Pte. Ltd.

Commissioner of Income-tax (International Tax)^*

V. Kameswar Rao and Vinod Kumar, JJ.

W.P.(C) No. 17355 OF 2025

NOVEMBER 14, 2025

Manuj Sabharwal, Devvrat Tiwari and Drona Negi, Advs. for the Petitioner. Siddhartha Sinha, SSC for the Respondent.

ORDER

CM APPL. 71407/2025 (Exemption)

V. KAMESWAR RAO, J. Exemption is allowed, subject to all just exceptions.

2. The application stands disposed of.

W.P.(C) 17355/2025

3. This petition has been filed with the following prayers:-

“a. Issue a writ in the nature of certiorari, mandamus or any other appropriate writ(s), order(s), directions(s) quashing the impugned order dated 26.03.2025 passed by the Respondent No. 1 (Annexure P-1) under s. 264 of the Incometax Act, 1961 with a direction to allow the application dated 28.04.2023 filed by the Petitioner and to issue further directions for grant of refund along with interest under s. 244A of the Act; and/ or”

4. The submission of learned counsel for the petitioner is primarily that the petitioner had filed an application on 28.04.2023 for revising the intimation/order dated 28.04.2022. The said order dated 28.04.2022 was issued under Section 143(1) of the Income Tax Act, 1961 (“the Act”) for the assessment year 2021-22. The submission is that though respondent no. 1 has accepted that the revision petition under Section 264 of the Act is maintainable in view of the decision of this Court in Vijay Gupta v. CIT ITR 643 (Delhi)and EPCOS Electronic Components S.A v. Union of India (Delhi), but denied the relief on the ground that CIT v. Sheraton International Inc. (Del) is pending consideration before the Supreme Court.

5. Thus, the conclusion rendered by respondent no. 1 not giving the benefit of the order passed by this Court in the petitioner’s own case, on the argument that Sheraton International Inc. (supra) is pending consideration before the Supreme Court is clearly misplaced. In any case, it is his submission that the SLP before the Supreme Court has been closed on the ground of low tax effect.

6. Though, Mr. Siddhartha Sinha is unable to confirm this particular submission made by the counsel for the petitioner, we by taking the submission made by the counsel for the petitioner on record as, concededly the issue stands covered by the judgment in Sheraton International Inc. (supra), CIT v. Sheraton International Inc. [decided by this court on ITA 271 of 2023, dated 11-5-2023] and, CIT v. Starwood Hotels & Resorts Worldwide Inc. 2022:DHC:004730and also the Commissioner of Income Tax – International Taxation v. Shangri-LA International Hotel Management Pte Ltd. [ITAs 532 & 535 of 2023. dated 18-09-2023]hold that the result in this petition shall also be the same as was decided by this Court in the assessee’s own case and accordingly, the petition is allowed and the order dated 26.03.2025 passed under Section 264 of the Act for the assessment year 2021-22 is set aside. The application filed on 28.04.2023 is allowed. The CIT (Appeals) shall take consequential action, in accordance with law.

7. In view of the above, the petition is disposed of.