ABU-DHABI COMMERICAL BANK LTD, MUMBAI V. ADIT (IT) -1(1), MUMBAI

CO 12/MUM/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5994 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 1991-1992
• Appeal Filed On: 15-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHARVAN KUMAR
• Assessee Lawyers: B AHROZE KAMDIN
• Section: 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.2862/MUM/2010 (ASSESSMENT YEAR: 1991-92) ADIT -1(1), 117, 1ST FLOOR, SCINDIA HOUSE, N.M. ROAD, BALLARD PIER, MUMBAI -400 038 ..... APPELLANT VS M/S. ABU DHABI COMMERCIAL BANK LTD., 75-REHMAT MANZIL, VEER NARIMAN POINT, CHURCHGTE, MUMBAI -400 020 .....RESPONDENT C.O. NO.12/MUM/2011 ARISING OUT OF ITA NO.2862/MUM/2010, A.Y. 1991-92 M/S. ABU DHABI COMMERCIAL BANK LTD., 75-REHMAT MANZIL, VEER NARIMAN POINT, CHURCHGTE, MUMBAI -400 020 .....CROSS OBJECTOR VS ADIT -1(1), 117, 1ST FLOOR, SCINDIA HOUSE, N.M. ROAD, BALLARD PIER, MUMBAI -400 038 ..... RESPONDENT PAN: AAACA 4216 B CROSS OBJECTOR ASSESSEE BY: MS. BAHROZE KAMDIN REVENUE BY: SHRI SHARVAN KUMAR O R D E R PER R.S. PADVEKAR, JM ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 2 THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE I MPUGNED ORDER OF THE LD. CIT (A)-X, MUMBAI DATED 25.1.2010 FOR THE A.Y. 1991- 92. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIO N CHALLENGING THE SAID IMPUGNED ORDER. WE FIRST TAKE THE REVENUES A PPEAL. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) ERRED IN HOLDING THAT THE INTE REST U/S.234D OF THE I.T. ACT HAS NO RETROSPECTIVE APPLI CATION WITHOUT APPRECIATING THAT THE PROVISIONS OF SEC. 23 4D ARE PROCEDURAL AND COMPENSATORY IN NATURE AND AS SUCH CAN BE APPLIED TO PROCEEDINGS OF EARLIER ASSESSMENT YEA RS PENDING AS ON 01.06.2003. 2. WE HAVE HEARD THE PARTIES. THE SHORT ISSUE IN C ONTROVERSY IS IN RESPECT OF THE INTEREST CHARGED BY THE A.O. U/S.234 D OF THE ACT. THE LD. COUNSEL SUBMITTED THAT THE PROVISIONS OF SECTIO N 234D IS INSERTED W.E.F. 1.6.2003 AND SAME CANNOT BE APPLIED PRIOR TO A.Y. 2004-05. THE LD. COUNSEL ALSO PLACED THE RELIANCE ON THE DEC ISION OF THE ITAT SPECIAL BENCH DELHI IN THE CASE OF ITO VS. EKTA PRO MOTERS P. LTD. 305 ITR 1 (DEL)(SB). THE LD. D.R. FAIRLY CONCEDED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF EKTA PROMOTERS P. LTD. (SUPRA). IN THE CASE OF EKTA PROMOTERS P. LTD. (SUPRA) THE H ONBLE SPECIAL BENCH HAS HELD THAT SECTION 234D IS APPLICABLE W.E. F. A.Y. 2004-05 AND NO INTEREST CAN BE CHARGED ON THE REFUND GRANTE D U/S.143(1) PRIOR TO THE SAID ASSESSMENT YEAR. WE, THEREFORE, FOLLOW ING THE PRINCIPLES LAID DOWN IN THE CASE OF EKTA PROMOTERS P. LTD. (SU PRA) CONFIRM THE ORDER OF THE LD. CIT (A) AND GROUNDS TAKEN BY THE R EVENUE ARE DISMISSED. ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 3 3. NOW, WE TAKE-UP ASSESSEES CROSS OBJECTION BEING 12 OF 2011. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- (A) THE COMMISSIONER OF INCOME-TAX (APPEALS)-10, M UMBAI [HEREINAFTER REFERRED TO AS THE CIT (A)] ERRED IN N OT DIRECTING THE ASSESSING OFFICER (AO) TO GRANT INTEREST ON THE INTEREST U/S.244A THAT BECAME DUE ON 17TH JULY, 2007 ON GIVI NG EFFECT TO THE TRIBUNAL ORDER WHICH HAD BEEN WRONGLY WITHHELD FROM THE APPELLANTS. (B) THE APPELLANTS SUBMIT THAT THEY HAVE SUFFERED L OSS OF INTEREST FROM 17TH JULY, 2007 ON THE INTEREST DUE O N 17TH JULY, 2007 BUT NOT GRANTED TO THE APPELLANTS. 4. WE HAVE HEARD THE PARTIES. IN THIS CASE, THE A. O. WORKED OUT THE INTEREST U/S.244A OF THE ACT AT ` 41,54,147/- A FTER REDUCING THE SUM OF ` 7,19,681/- AND ` 41,66,905/- WHICH WAS INT EREST ALREADY GRANTED TO THE ASSESSEE. IT APPEARS THAT THAT THOU GH THE REFUND WAS DETERMINED BUT THERE WAS DELAY IN PAYMENT OF THE SA ME TO THE ASSESSEE-BANK. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THERE IS A REVENUE LOSS TO THE ASSESSEE AS THE REFUND WAS WITH HELD. THE A.O. WORKED OUT INTEREST U/S.244A OF ` 41,51,147/- AND A SSESSEE WAS GRANTED THE INTEREST BY THE A.O. AFTER GIVING THE E FFECT TO THE ITAT ORDER DATED 29.7.2005. THE ASSESSEE CONTENDS THAT THE A. O. IS BOUND TO GRANT THE INTEREST ON THE DUE INTEREST IF THERE IS A DELAY IN THE PAYMENT OF THE SAME. IN THE CASE OF ETERNITY LTD. 12 SOT 4 0 (MUM), THE TRIBUNAL HAS HELD THAT THE ASSESSEE IS ENTITLED TO INTEREST ON INTEREST DUE INCLUDED IN THE AMOUNT OF THE REFUND AND WHEN THERE IS A DELAY IN PAYMENT OF THE REFUND TO THE ASSESSEE U/S.244A A S REFUND DOES NOT ONLY CONSIST OF TAX REFUNDABLE TO THE ASSESSEE BUT ALSO INTEREST DUE ON THE SAID TAX WHICH PAYMENT IS DELAYED BY THE A.O. IN THE CASE OF DCTI VS. STATE BANK OF TRAVANCORE (2007) 106 ITD 308 (CO CHIN) AFTER ELABORATE DISCUSSION ON THE PROVISION OF SECTION 24 4A AND AFTER ALSO ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 4 CONSIDERING THE PRECEDENTS IN THE CASE OF CHIMANBHA I PATEL VS. ACIT 210 ITR 419, DIT WORKS VS. ACIT 195 ITR 227, IT IS HELD AS UNDER:- 8. AS FAR AS THE PROVISIONS OF SECTION 244A ARE CO NCERNED, THE LEGISLATURE HAS USED THE WORDS WHERE THE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT. IT MEA NS THAT REFUND DOES NOT ONLY CONSIST OF TAX REFUNDABLE TO THE ASSESSEE, BUT ALSO INTEREST DUE ON THE SAID TAX WHICH HAS B ECOME PAYABLE BY VIRTUE OF THE PROVISIONS OF THIS ACT TO THE ASSE SSEE AND WHICH IS NOT PAID AND THERE IS A DELAY IN PAYMENT OF THE SAI D INTEREST THAT WILL CONSTITUTE THE REFUND. THE ACT HAS CONFERRED A RIGHT ON THE ASSESSEE TO CLAIM THE INTEREST ON THE AMOUNT OF THE TAX WHICH IS REFUNDABLE TO HIM WHICH IS PAID IN EXCESS OF THE DE MAND AND THE STATUTE HAS ALSO PRESCRIBED THE TIME-LIMIT FOR PAYM ENT OF THE TAX AS WELL AS INTEREST DUE ON THE SAID TAX. IN OUR OPI NION, THE TERM REFUND USED IN SECTION 244A COMPRISED OF THE ELEM ENT OF TAX AND ALSO INTEREST DUE ON THAT PARTICULAR AMOUNT O F TAX WHICH HAS BEEN DELAYED BY THE DEPARTMENT. IT IS TRUE THAT IN THE CASES OF SANDVIK ASIA LTD. (SUPRA), NARENDRA DOSHI (SUPRA ), D.J. WORKS (SUPRA), THE OLD SECTIONS 214, 243, 244 WERE UNDER CONSIDERATION, BUT IT MAKES NO DIFFERENCE FOR APPLYING THE PRINCIP LES LAID DOWN IN SAID DECISION TO SECTION 244A AS IT IS SUBSTITUTED FOR SECTIONS 214, 243 AND 244. AFTER CONSIDERING THE LANGUAGE USED BY THE LEGISLATURE IN SECTION 244A, THE LEGISLATURE HAS EN LARGED THE PROVISION BY GIVING CLEAR BENEFITS TO THE ASSESSEE. WE, ARE THEREFORE, OF THE OPINION THAT THE PRINCIPLES APPLI CABLE TO THE EARLIER PROVISIONS; IN RESPECT OF THE PAYMENT OF IN TEREST BY THE DEPARTMENT ON THE DELAYED AMOUNT OF TAX REFUNDABLE AND INTEREST DUE THEREON ARE ALSO APPLICABLE TO SECTION 244A OF THE ACT. 9. THE LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED O N THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF KURUMBE R BETTA ESTATE (SUPRA). IN THE SAID DECISION, THE HONBLE HIGH COU RT HAS RELIED ON ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 5 THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF MO DI INDUSTRIES LTD. V. CIT [1995] 216 ITR 7591 AND OBSERVED THAT I T IS AN ACCEPTED PROPOSITION IN TAX JURISPRUDENCE THAT TAX LAWS KNOW NO EQUITY. THERE CANNOT BE A DIRECTION TO THE REVENUE TO PAY INTEREST IN EQUITY, WHEN THERE IS NO SUCH PROVISION IN THE I NCOME-TAX ACT. THE DECISION IN THE CASE OF MODI INDUSTRIES LTD. (S UPRA) HAS BEEN CONSIDERED BY THE HONBLE SUPREME COURT IN THE RECE NT DECISION IN THE CASE OF SANDVIK ASIA LTD. (SUPRA) AND HAS OBSER VED AS UNDER : THE HIGH COURT IN ITS JUDGMENT HAS REFERRED TO THE PROVISIONS OF SECTION 244(1A) AND THE DECISION OF T HIS COURT IN MODI INDUSTRIES LTD. V. CIT [1995] 216 ITR 759 E XTRACTED TWO PARAGRAPHS FROM THIS COURTS JUDGMENT HOLDING T HAT THERE CAN BE NO QUESTION OF PAYING INTEREST UNDER B OTH SECTIONS 214(1A) AND 244(1A) OF THE ACT SIMULTANEOU SLY, AND FURTHER THAT THERE IS NO RIGHT TO RECEIVE INTER EST EXCEPT AS PROVIDED BY THE STATUTE. THE DECISION IN MODI IN DUSTRIES LTD.S CASE [1995] 216 ITR 759 (SC), HAS NO BEARING WHATSOEVER ON THE ISSUE IN HAND AS THE ISSUE IN THA T CASE WAS THE CORRECT MEANING OF THE PHRASE REGULAR ASSESSMENT AND AS A CONSEQUENCE UNDER WHICH PROVIS ION AN ASSESSEE WAS ENTITLED TO INTEREST FOR THE PERIOD UP TO THE DATE OF REGULAR ASSESSMENT AND THEREAFTER. THE MATT ER OF WHAT WAS DUE TO IT IN TERMS OF THE DECISION IN MODI INDUSTRIES LTD.S CASE [1995] 216 ITR 759 (SC) IS O VER, CONCLUDED, NO LONGER IN DISPUTE AND WAS AGREED/ACCE PTED ON MARCH 27, 1998 WHEN THE SECOND RESPONDENT GAVE E FFECT TO THE PREVIOUS ORDER OF THIS COURT DATED APRIL 30, 1997. THE WORKING OF THE RESPONDENTS ITSELF CONCLUSIVELY SHOW S, FURTHER THE INTEREST RECEIVED IS ADMITTEDLY IN ACCO RDANCE WITH THE ACT. THE DECISION IN MODI INDUSTRIES LTD. S CASE [1995] 216 ITR 759 (SC), IN OUR VIEW, HAS NO BEARIN G ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 6 WHATSOEVER ON THE MATTER IN HAND. THE MAIN ISSUE NO W IS WHETHER AN ASSESSEE IS ENTITLED TO BE COMPENSATED B Y THE REVENUE FOR THE DELAY IN PAYING TO THE ASSESSEES A MOUNTS ADMITTED DUE TO IT? 10. WE FIND THAT IN THE CASE OF KURUMBER BETTA EST ATE (SUPRA), THE DECISION OF THE SUPREME COURT IN THE CASE OF NA RENDRA DOSHI (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE JURISD ICTIONAL HIGH COURT WHICH IS, IN OUR OPINION, DIRECTLY ON THE ISS UE BEFORE US. FURTHER, THE DECISION IN THE CASE OF NARENDRA DOSHI (SUPRA) IS BY THE LARGER BENCH OF THE SUPREME COURT. WE, THEREFOR E, RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE S UPREME COURT IN THE CASE OF NARENDRA DOSHI (SUPRA) AND THE RECEN T DECISION OF THE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (SUPRA), HOLD THAT THE CIT (APPEALS) HAS RIGHTLY DIRECTED THE ASS ESSING OFFICER TO PAY INTEREST TO THE ASSESSEE ON THE AMOUNT OF INTER EST ON THE TAX REFUNDABLE WHICH WAS DELAYED BY THE DEPARTMENT. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (APPEALS). WE, TH EREFORE, CONFIRM THE ORDER OF THE CIT (APPEALS) ON THIS ISSUE. 5. WE, ACCORDINGLY, ALLOW THE CROSS OBJECTION OF TH E ASSESSEE AND DIRECT THE A.O. TO ALLOW THE INTEREST IN THE LIGHT OF THE PRINCIPLES LAID DOWN IN THE CASE OF STATE BANK OF TRAVANCORE (SUPRA ). ACCORDINGLY, GROUNDS TAKEN IN THE C.O. ARE ALLOWED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND ASSESSEES CROSS OBJECTION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 3 TH MAY 2011. SD/- SD/- ( R.S. SYAL ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 13 TH MAY 2011 ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)10, MUMBAI. 4) THE DIT (INTERNATIONAL TAXATION)/CIT CONCERNED, MUM BAI. 5) THE D.R. A BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 2862/M/2010 C.O. 12/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 8 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 09.05.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 10.05.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER