C.I.T., BANGALORE vs CHOWGULE & CO.

The Supreme Court upheld the Bombay High Court's decision quashing the Commissioner of Income Tax's order under Section 263, stating that Rule 115(c) of the Income Tax Rules, 1962 is ultra vires the Income Tax Act. The Court established that the amounts received by the assessee from foreign buyers should be taxed based on actual receipts during the accounting period, not on a notional rate as per Rule 115. Consequently, the appeal by the Commissioner was dismissed, affirming the High Court's ruling.