DBS BANK LTD, MUMBAI V. DDIT (IT)-1(2), MUMBAI

CO 248/MUM/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8564 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 13-05-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 31-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P J PARDIWALA
• Keywords: Transfer pricing; International transaction; Earning of tax free income; Proportionate interest
• Section: 92C; 244A; 14A; 10B; 10; 92

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K, MUMBAI .. , ! ' , # !, $ BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.6631/MUM/2006 : ASST.YEAR 2002-2003 THE DEPUTY DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) 1(2) MUMBAI. THE DEVELOPMENT BANK OF SINGAPORE 122 MAKER CHAMBERS IV, 12 TH FLOOR, NARIMAN POINT, MUMBAI 400 021. PAN : AAACT4652J ( %& / // / APPELLANT) ( ( ( ( / VS. ( )*%&/ RESPONDENT) CO NO.248/MUM/2009 : ASST.YEAR 2002-2003 THE DEVELOPMENT BANK OF SINGAPORE 122 MAKER CHAMBERS IV, 12 TH FLOOR, NARIMAN POINT, MUMBAI 400 021. THE DEPUTY DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) 1(2) MUMBAI. ( )*$ / // / CROSS OBJECTOR) ( ( ( ( / VS. ( )*%&/ RESPONDENT) + + + + , ,, , - - - - / REVENUE BY : S/SHRI AJIT KUMAR JAIN & MAHESH KUMAR #( ./ #( ./ #( ./ #( ./ , - , - , - , - / ASSESSEE BY : SHRI P.J.PARDIWALA ( , / / / / / DATE OF HEARING : 13.05.2013 012 , / / DATE OF PRONOUNCEMENT : 17.05.2013 !3 !3 !3 !3 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER O F INCOME-TAX (APPEALS) ON 31.08.2006 IN RELATION TO THE ASSESSME NT YEAR 2002- 2003. 2. FIRST GROUND OF THE REVENUES APPEAL IS AGAINST ALLOWING DEDUCTION OF STAFF COSTS OF ` 16,66,659 AND SPECIFIC EXPENSES OF ` 21,977 INCURRED BY THE HEAD OFFICE ON BEHALF OF THE ASSESSEE IN ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 2 ENTIRETY HOLDING THAT SUCH EXPENSES WERE NOT COVERE D BY THE EXPENSES MENTIONED U/S 44C. BRIEFLY STATED THE FACTS OF TH E CASE ARE THAT THE ASSESSEE IS AN INDIAN BRANCH OF THE DEVELOPMENT BAN K OF SINGAPORE. IT CLAIMED DEDUCTION OF ` 16.66 LAKH TOWARDS SALARY COST OF EXPATRIATE STAFF DEPLOYED AT THE BRANCH ON A FULL TIME BASIS I NCURRED BY THE HEAD OFFICE ON BEHALF OF BRANCH AND ` 21,977 TOWARDS SPECIFIC EXPENSES INCURRED BY HEAD OFFICE ON BEHALF OF INDIAN OPERATI ONS / BRANCH. IN THE COMPUTATION OF INCOME, THE ASSESSING OFFICER ALLOWE D DEDUCTION FOR THESE TWO SUMS. INADVERTENTLY, THE ASSESSEE, IN ITS FIRST APPEAL, RAISED A GROUND ON THIS SCORE BY PRESUMING THAT THE A.O. HAD NOT ALLOWED DEDUCTION IN RESPECT OF THESE TWO SUMS. THE LEARNED CIT(A) NOTICED THAT THE STAFF COST OF ` 16.66 LAKH AND SPECIFIC EXPENSES OF ` 21,977 WERE SPECIFICALLY INCURRED BY THE HEAD OFFICE ON B EHALF OF THE INDIAN BRANCH. HE HELD SUCH EXPENSES TO BE ALLOWABLE IN FU LL WITHOUT BEING COVERED U/S 44C. THE REVENUE IS AGGRIEVED AGAINST T HIS DIRECTION OF THE LEARNED CIT(A). 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT TH E ASSESSING OFFICER DID NOT DISPUTE THE DEDUCTIBILITY OF THE THIS AMOUN T AS CLAIMED BY THE ASSESSEE AND PARTICULARLY ALLOWED SUCH DEDUCTION IN THE FINAL DETERMINATION OF INCOME. NOTWITHSTANDING THAT, THER E IS NO DISPUTE ON THE FACT THAT THESE TWO AMOUNTS WERE EXCLUSIVELY IN CURRED BY THE HEAD OFFICE FOR THE INDIAN BRANCH. THE CASE OF THE REVEN UE IS THAT THESE AMOUNTS OUGHT TO HAVE BEEN INCLUDED IN THE OVERALL HEAD OFFICE EXPENSES DEDUCTIBLE U/S 44C. WE DO NOT FIND ANY FO RCE IN THE VIEW ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 3 POINT CANVASSED ON BEHALF OF THE REVENUE BECAUSE SE CTION 44C DOES NOT COVER EXCLUSIVE EXPENSES INCURRED BY THE HEAD O FFICE FOR A PARTICULAR BRANCH. RATHER, IT EMBRACES THE ALLOCATI ON OF COMMON HEAD OFFICE EXPENSES DEFINED IN EXPLANATION (IV) TO SECT ION 44C AMONGST VARIOUS BRANCHES. THE HONBLE JURISDICTIONAL HIGH C OURT IN CIT VS. EMIRATES COMMERCIAL BANK LTD. (2003) 262 ITR 55 (BO M) HAS HELD THAT SECTION 44C CONTEMPLATES ALLOCATION OF EXPENSE S AMONGST VARIOUS ENTITIES AND DOES NOT COVER A CASE IN WHICH THE EXP ENDITURE IS EXCLUSIVELY INCURRED FOR THE BRANCH. SIMILAR VIEW H AS BEEN REITERATED BY VARIOUS BENCHES OF THE TRIBUNAL INCLUDING ADDTL. DIT (IT) VS. BANK OF BAHRAIN & KUWAIT (2011) 44 SOT 693 (MUM) AND JCIT VS. AMERICAN EXPRESS BANK LTD. (2012) 138 ITD 288 (MUM) . SINCE THE CLAIM OF THE ASSESSEE, AS APPROVED IN THE FIRST APP EAL, THAT THESE EXPENSES WERE INCURRED BY THE HEAD OFFICE EXCLUSIVE LY FOR THE INDIAN BRANCH, COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE, WE ARE OF THE CONSIDERED OPINION THAT THESES EXPENSES HAVE BEEN RIGHTLY HELD TO BE ALLOWABLE IN FULL WITHOUT BEING COVERED UNDER HEAD OFFICE EXPENSES AS PROVIDED FOR IN SECTION 44C OF THE ACT. AS SUCH, THE FINDING RETURNED BY THE LD. CIT(A) IN THIS REGARD I S COUNTENANCED. THIS GROUND IS NOT ALLOWED. 4. GROUND NO.2 OF THE REVENUES APPEAL IS AGAINST A LLOWING LOSS ON ACCOUNT OF REVALUATION OF FOREIGN EXCHANGE CONTRACT S OF ` 3,88,12,817. BOTH THE SIDES ARE IN AGREEMENT THAT SIMILAR ISSUE HAS BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN ASSESSEES FAVOUR IN EARLIER YEARS. COPIES OF SUCH ORDERS HAVE BEEN PLACED ON RE CORD. ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 4 RESPECTFULLY FOLLOWING THE PRECEDENTS, WE UPHOLD TH E IMPUGNED ORDER ON THIS ISSUE. THIS GROUND FAILS. 5. GROUND NO.3 OF THE DEPARTMENTAL APPEAL IS AGAINS T ALLOWING EXEMPTION U/S 10 IN RESPECT OF TAX FREE BONDS AMOUN TING TO ` 66,50,000 AS AGAINST ` 13,18,463 ALLOWED BY THE AO. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE EARNED IN TEREST INCOME OF ` 66.50 LAKH FROM 9.5% TAX FREE BONDS OF NATIONAL HOU SING BANK. SUCH AMOUNT WAS CLAIMED AS EXEMPT U/S 10(15) OF THE ACT. THE ASSESSING OFFICER CONSIDERED THE PROVISIONS OF SECT ION 14A IN THE LIGHT OF VARIOUS JUDGMENTS INCLUDING THAT OF THE HO NBLE SUPREME COURT IN RAJASTHAN STATE WAREHOUSING CORPORATION V. CIT (200 0) 242 ITR 450 (SC) AND CAME TO THE CONCLUSION THAT THE ENTIRE AMOUNT COULD NOT BE GRANTED EXEMPTION. HE HELD THAT THE EX PENSES INCURRED FOR EARNING SUCH TAX FREE INCOME WERE TO BE REDUCED FROM THE GROSS INTEREST INCOME ON PRO-RATA BASIS FOR ALLOWING EXEM PTION U/S 10. THAT IS HOW, HE COMPUTED PROPORTIONATE INTEREST EXPENDIT URE OF ` 40.49 LAKH AND PROPORTIONATE OPERATING EXPENDITURE OF ` 12.81 LAKH RELATABLE TO EXEMPT INTEREST INCOME. AFTER REDUCING THESE TWO AMOUNTS FROM THE GROSS AMOUNT OF INTEREST RECEIVED, THE AO REST RICTED THE CLAIM OF EXEMPTION U/S 10(15) TO A SUM OF ` 13.18 LAKH. THE LEARNED CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS POINT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS IN THE LIGH T OF MATERIAL PLACED BEFORE US AND PRECEDENTS RELIED UPON. IT IS NOTICED THAT SIMILAR ISSUE CAME UP FOR ADJUDICATION BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 5 ACIT (IT) VS. CREDIT LYONNAIS (2013) 21 ITR (TRIB) 359 (MUM) . IN THIS CASE IT HAS BEEN HELD THAT EXEMPTION U/S 10(15 ) IS AVAILABLE ON GROSS AMOUNT OF INTEREST. AT THE SAME TIME, IT HAS ALSO BEEN HELD THAT SINCE INTEREST INCOME FROM TAX FREE BONDS IS PRE SE NOT TAXABLE, THE EXPENSES INCURRED IN RELATION TO SUCH EXEMPT INCOME CANNOT EQUALLY BE ALLOWED AS DEDUCTION. WITHOUT FURTHER ELABORATION OF THE POINT, WE HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 10(15) ON THE GROSS INTEREST AMOUNTING TO ` 66,50,000. SIMILARLY, IT IS HELD IN PRINCIPLE THAT THE EXPENSES INCURRED FOR EARNING SUCH INTEREST INC OME ARE NOT ELIGIBLE FOR DEDUCTION IN TERMS OF SECTION 14A. TH E ASSESSING OFFICER HAS CONSIDERED INTEREST EXPENSES OF ` 40.49 LAKH AS ATTRIBUTABLE TO INVESTMENT IN BONDS. IT IS SEEN THAT THE INVESTMENT OF ` 7 CRORE WAS MADE IN TAX FREE BONDS ON 06.03.1998. IN THE EARLIE R YEARS, IT HAS BEEN ESTABLISHED THAT THE INVESTMENT IN SUCH TAX FREE BO NDS WAS MADE OUT OF THE ASSESSEES OWN CAPITAL AND FREE RESERVES. TH AT IS THE REASON FOR WHICH THE DISALLOWANCE OF INTEREST MADE BY THE ASSE SSING OFFICER HAS BEEN HELD TO BE NOT SUSTAINABLE. AS THE INVESTMENT IN TAX FREE BONDS WAS MADE IN AN EARLIER YEAR AND THERE IS NO CURRENT FRESH INVESTMENT IN ANY BONDS FETCHING EXEMPT INCOME, IN OUR CONSIDE RED OPINION, NO INTEREST CAN BE DISALLOWED U/S 14A. IN SO FAR AS TH E DISALLOWANCE OF OPERATING EXPENSES OF ` 12.81 LAKH MADE BY THE A.O. IS CONCERNED, WE FIND THAT THE AO MADE IT ON A PROPORTIONATE BASI S BY TAKING THE FIGURE OF OPERATING EXPENSES FROM PROFIT AND LOSS A CCOUNT AND THEN APPORTIONING IT IN THE RATIO OF TOTAL INTEREST EARN ED AS TO INTEREST OF 9.5% TAX FREE BONDS. THIS DOES NOT APPEAR TO BE A C ORRECT BASIS FOR APPORTIONMENT. AT THE SAME TIME, IT IS NOTICED THAT THE LD. CIT(A) HAS ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 6 ALSO NOT GIVEN ANY REASONS FOR DELETING SUCH DISALL OWANCE. IN THE ABOVE DISCUSSED CASE OF CREDIT LYONNAIS (SUPRA) , THE TRIBUNAL HAS DIRECTED TO CURTAIL THE DISALLOWANCE FOR OPERATING EXPENSES AT THE RATE OF 2% OF THE EXEMPT INCOME. FOLLOWING THE PRECEDEN T, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE ACCORDINGLY TO A SU M OF ` 1,33,000. 7. GROUND NO.4 OF THE REVENUES APPEAL IS AGAINST T HE DELETION OF ADDITION OF ` 50,476 MADE ON ACCOUNT OF TRANSFER PRICING ADJUSTME NT. THE FACTUAL MATRIX OF THIS GROUND IS THAT THE ASSES SEE ENTERED INTO TWO SETS OF INTERNATIONAL TRANSACTIONS OF GRANTING LOAN S EARNING INTEREST ON ONE HAND AND PAYING INTEREST ON BORROWINGS ON THE O THER TO AND FROM ITS ASSOCIATED ENTERPRISES (AES). THERE IS NO DISP UTE IN SO FAR AS THE SECOND SET OF TRANSACTIONS OF BORROWING AND PAYMENT OF INTEREST ARE CONCERNED. THE ENTIRE CONTROVERSY REVOLVES AROUND T HE INTEREST ON LENDING TRANSACTIONS WHICH ARE RESTRICTED TO ITS HO NG KONG AND LONDON BRANCHES AND ALSO SINGAPORE HEAD OFFICE. THE ASSESSEE FOLLOWED COMPARABLE UNCONTROLLED PRICE (CUP) METHOD FOR BENCHMARKING BOTH THE SETS OF INTERNATIONAL TRANSAC TIONS. THE ASSESSEE PLACED SURPLUS FOREIGN CURRENCY FUNDS WITH ITS HEAD OFFICE / BRANCH OFFICES FROM TIME TO TIME ON WHICH IT EARNED INTERE ST INCOME. THE FUNDS WERE PLACED AT THE CLOSE OF THE BANKING HOURS AND WHICH WERE AVAILABLE TO IT FOR THE BANKING ACTIVITIES ON THE I MMEDIATELY NEXT DAY. SOMETIMES THE FUNDS WERE PLACED FOR A DURATION OF M ORE THAN ONE DAY. THE ASSESSEE EARNED INTEREST INCOME OF ` 27.76 LAKHS ON VARYING RATES OF INTEREST. THE ASSESSEE BENCHMARKED THE RAT E OF INTEREST AT THE END OF THE DAY ON THE BASIS OF REUTER RATES, WHICH WERE ADMITTED TO BE ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 7 NOTHING BUT LIBOR RATES OBTAINED FROM REUTERS HISTO RY PAGES. THE ASSESSEE CONTENDED THAT THERE WAS NO TRANSACTION WH ERE THE DIFFERENCE IN THE RATES ACTUALLY CHARGED AND THAT OF REUTERS / LIBOR RATES WAS MORE THAN 5%. THE TRANSFER PRICING OFFICER (TPO) DI D NOT DISPUTE THE FACTUM OF THE APPLICABILITY OF LIBOR RATES FOR BENCHMARKING INTEREST EARNED BY THE ASSESSEE FROM SUCH TEMPORARY INTER BANK TRANSFER OF FUNDS TO ITS BRANCHES AND HEAD OFFICE. HOWEVER, THE EXTANT ADDITION CAME TO BE MADE BY REJECTING THE ASSESSEE S CLAIM OF +-5% ADJUSTMENT. RELYING ON THE PROVISIONS OF SECTION 92 C(2), THE TPO CAME TO THE CONCLUSION THAT THE OF BENEFIT OF PROVI SO WAS AVAILABLE ONLY IF MORE THAN ONE ARMS LENGTH PRICE WAS DETERM INED. SINCE THE ASSESSEE HAD SUBMITTED ONLY LIBOR RATES AS COMPARAB LE UNCONTROLLED TRANSACTION, THE TPO HELD THAT THE BENEFIT THE OPTI ON OF VARIATION OF PLUS MINUS 5% TO THE ARITHMETICAL MEAN WAS NOT AVAI LABLE TO THE ASSESSEE. THIS LED TO ADDITION OF ` 50,476. THE LEARNED CIT(A) CONCURRED WITH THE SUBMISSIONS ADVANCED ON BEHALF O F THE ASSESSEE THAT THE LIBOR WAS EFFECTIVE WEIGHTED AVERAGE RATE ON WHICH THE BORROWINGS / LENDING TRANSACTIONS WERE RECORDED AND ON THAT BASIS LIBOR RATE SHOULD BE TAKEN AS AN ARITHMETICAL MEAN RATE. HE, THEREFORE, ORDERED FOR THE DELETION OF THE ADDITION . 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. SECTION 92C DEALS WITH COMPUTA TION OF ARMS LENGTH PRICE (ALP). SUB-SECTION (1) OF THIS PROVISI ON PROVIDES THAT THE ALP IN RELATION TO AN INTERNATIONAL TRANSACTION SHA LL BE DETERMINED BY ANY OF THE PRESCRIBED METHODS, BEING THE MOST APPRO PRIATE METHOD ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 8 HAVING REGARD TO THE NATURE OF TRANSACTION OR CLASS OF TRANSACTION OR CLASS OF ASSOCIATED PERSONS ETC. FIVE SPECIFIC METH ODS STARTING WITH (A) COMPARABLE UNCONTROLLED PRICE METHOD, ARE SET OUT I N THIS PROVISION WITH THE SIXTH RESIDUAL METHOD UNDER CLAUSE (F) AS : SUCH OTHER METHOD AS MAY BE PRESCRIBED BY THE BOARD. SUB-SECT ION (2) PROVIDES THAT THE MOST APPROPRIATE METHOD REFERRED TO IN SUB -SECTION (1) SHALL BE APPLIED FOR DETERMINATION OF ARMS LENGTH PRICE IN THE MANNER AS MAY BE PRESCRIBED, WHICH HAS BEEN PRESCRIBED IN RUL E 10B(1). PROVISO TO SECTION 92C(2), WHICH IS THE CORE OF CONTROVERSY , AT THE RELEVANT TIME PROVIDED AS UNDER :- PROVIDED THAT WHERE MORE THAN ONE PRICE IS DETERM INED BY THE MOST APPROPRIATE METHOD, THE ARMS LENGTH PR ICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES, OR, AT THE OPTION OF THE ASSESSEE, A PRICE WHICH MA Y VARY FROM THE ARITHMETICAL MEAN BY AN AMOUNT NOT EXCEEDI NG FIVE PER CENT OF SUCH ARITHMETICAL MEAN. 9. ON GOING THROUGH SUB-SECTION (2) IN JUXTAPOSITIO N TO THE ABOVE EXTRACTED PROVISO, IT TRANSPIRES THAT THE MOST APPR OPRIATE METHOD REFERRED IN SUB-SECTION (1) [ANY ONE OF THE SIX MET HODS] SHALL BE APPLIED FOR THE DETERMINATION OF ALP. THE MANNER OF COMPUTATION OF ALP UNDER THE CUP METHOD HAS BEEN PRESCRIBED UNDER RULE 10B(1)(A) AS UNDER : - (A) COMPARABLE UNCONTROLLED PRICE METHOD, BY WHICH , (I) THE PRICE CHARGED OR PAID FOR PROPERTY TRANSFE RRED OR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANSACTIONS, IS IDENTIFIED ; ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 9 (II) SUCH PRICE IS ADJUSTED TO ACCOUNT FOR DIFFERE NCES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPARABLE UNCONTROLLED TRANSACTIONS OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS, WHICH COULD MATERIALLY AFFECT THE PRICE IN THE OPEN MARKET ; (III) THE ADJUSTED PRICE ARRIVED AT UNDER SUB-CLAU SE (II) IS TAKEN TO BE AN ARMS LENGTH PRICE IN RESPECT OF THE PROPERTY TRANSFERRED OR SERVICES PROVIDED IN THE INTERNATIONAL TRANSACTION ; 10. FROM THE ABOVE RULE, IT IS PALPABLE THAT THE PRICE CHARGED OR PAID IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANSACTIONS, AS ADJUSTED TO ACCOUNT FOR DIFFERENCE S, IS TAKEN AS ALP OF THE INTERNATIONAL TRANSACTION. WHAT EMERGES FROM THE INTERPRETATION OF THE FIRST PART OF THE PROVISO IS THAT WHERE MORE THAN ONE PRICE IS DETERMINED BY THE MOST APPROPRIATE METHOD, THE ARM S LENGTH PRICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES. THUS UNDER THE CUP METHOD, IF THERE ARE MORE THAN ONE COMPARAB LE UNCONTROLLED PRICE, THEN THE ALP SHALL BE TAKEN TO BE THE ARITHM ETICAL MEAN OF SUCH PRICES. SECOND PART OF THE PROVISO GRANTS AN OPTION TO THE ASSESSEE BY PROVIDING THAT THE ALP MAY BE A PRICE VARYING FROM THE ARITHMETICAL MEAN BY AN AMOUNT NOT EXCEEDING FIVE PER CENT OF SU CH ARITHMETICAL MEAN. IT MEANS THAT IF THE DIFFERENCE BETWEEN THE A RITHMETICAL MEAN OF SUCH PRICES AND THE PRICE ACTUALLY CHARGED OR PA ID DOES NOT EXCEED 5%, THEN THE PRICE SO CHARGED OR PAID MAY BE TAKEN AS ALP, NOT CALLING FOR ANY ADJUSTMENT. IN ORDER TO BE ELIGIBL E FOR EXERCISING OPTION OF HAVING ALP AS A PRICE VARYING BY +-5% OF THE PRICE WORKED OUT AS PER RULE 10B, IT IS NECESSARY THAT THERE SH OULD BE MORE THAN ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 10 ONE PRICE DETERMINED BY THE MOST APPROPRIATE METHOD AS PER RULE 10B WHICH SHOULD BE THEN AVERAGED. TO PUT IT SIMPLY, I F THERE IS MORE THAN ONE PRICE DETERMINED BY THE MOST APPROPRIATE M ETHOD, THE ALP SHALL BE CONSIDERED BY TAKING THE CUSHION OF PLUS M INUS FIVE PERCENT OF THE ARITHMETICAL MEAN OF SUCH PRICES. IF, HOWEVE R, THERE IS ONLY ONE PRICE DETERMINED BY THE MOST APPROPRIATE METHOD, TH EN THIS OPTION OF PLUS MINUS 5% IS NOT AVAILABLE FOR DETERMINATION OF THE ALP. 11. AT THIS JUNCTURE, WE CONSIDER IT EXPEDIENT TO N OTE THAT THE ABOVE QUOTED PROVISO TO SECTION 92C(2) HAS BEEN SUBSTITUT ED BY THE FINANCE (NO.2) ACT, 2009 W.E.F. 1.10.2009 WITH TWO PROVISOS . THE FIRST PROVISO STATES THAT : ` PROVIDED THAT WHERE MORE TH AN ONE PRICE IS DETERMINED BY THE MOST APPROPRIATE METHOD, THE ARM S LENGTH PRICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES. AS PER THE SECOND PROVISO IF THE VARIATION BETWEEN THE ARM'S L ENGTH PRICE SO DETERMINED AND PRICE AT WHICH THE INTERNATIONAL TRA NSACTION HAS ACTUALLY BEEN UNDERTAKEN DOES NOT EXCEED THE SPECIF IED PERCENTAGE OF THE LATTER, THE PRICE AT WHICH THE INTERNATIONAL TR ANSACTION HAS ACTUALLY BEEN UNDERTAKEN SHALL BE DEEMED TO BE THE ARM'S LEN GTH PRICE. MAIN SUB-SECTION (2) PROVIDES THAT THE MOST APPROPRIATE METHOD AS PER SUB- SECTION (1) SHALL BE APPLIED FOR THE DETERMINATION OF ALP. AS PER THE FIRST PROVISO WHERE MORE THAN ONE PRICE IS DETERMIN ED BY THE MOST APPROPRIATE METHOD, THE ARMS LENGTH PRICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES. PER CONTRA, IF TH ERE IS ONLY ONE PRICE WHICH IS DETERMINED BY THE MOST APPROPRIATE METHOD, THEN AS PER THE MAIN SUB-SECTION (2) WITHOUT THE AID OF PROVISO, TH AT PRICE SHALL ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 11 CONSTITUTE THE ALP. THE SECOND PROVISO COMES INTO P LAY TO DEEM THE ACTUAL TRANSACTED PRICE AS THE ALP. IT PROVIDES THA T WHERE THE VARIATION BETWEEN THE ALP ` SO DETERMINED DOES NOT EXCEED THE SPECIFIED PERCENTAGE, THE PRICE AT WHICH THE INTERN ATIONAL TRANSACTION HAS ACTUALLY BEEN UNDERTAKEN ` SHALL BE DEEMED TO BE THE ARMS LENGTH PRICE . THE WORDS ` SO DETERMINED AS EMPLOYED IN THE SECOND PROVISO ASSUME SIGNIFICANCE. AS THESE HAVE BEEN USED IN TH E SECOND PROVISO DISTINCT FROM THE SUBJECT MATTER OF THE FIRST PROVI SO, NATURALLY THESE WILL APPLY TO THE ALP DETERMINED UNDER SUB-SECTION (2) CONSISTING OF THE MAIN PROVISION AND ALSO THE FIRST PROVISO. RESU LTANTLY, THE OPTION OF ` DEEMED ALP SHALL EXTEND NOT ONLY TO A SITUATION WHERE MO RE THAN ONE PRICE IS DETERMINED AS ALP BY THE MOST APPROPRI ATE METHOD BUT ALSO WHERE ONLY ONE PRICE IS DETERMINED AS ALP. THE NET RESULT IS THAT THE OPTION TO THE ASSESSEE SHALL BE AVAILABLE IN BO TH THE SITUATIONS, COVERED UNDER MAIN SUB-SECTION (2) AND ALSO THE FIR ST PROVISO. 12. WE REVERT TO THE POSITION OF LAW GOVERNED BY T HE SINGLE PROVISO BEFORE SUBSTITUTION BY THE FINANCE (NO.2) ACT, 2009 WHICH HAS BEEN ACCEPTED BY THE ASSESSEE AS LAYING DOWN THAT IF THE RE IS ONLY ONE PRICE DETERMINED BY THE MOST APPROPRIATE METHOD, THEN THI S OPTION OF PLUS MINUS 5% IS NOT AVAILABLE FOR DETERMINATION OF ALP. NOW THE MOOT POINT FOR OUR DETERMINATION IS AS TO WHETHER THE LI BOR RATE SHOULD BE CONSIDERED AS A SINGLE INTEREST RATE OR THE ARITHME TICAL MEAN OF MORE THAN ONE INTEREST RATE. IN ORDER TO FIND ANSWER TO THIS QUESTION, IT IS SINE QUA NON TO UNDERSTAND THE CONNOTATION AND IMPORT OF LIBOR. IN THIS REGARD, BOTH THE SIDES HAVE PLACED ON RECORD S OME LITERATURE ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 12 THROWING LIGHT ON LIBOR. WIKIPEDIA, THE FREE ENCYCL OPEDIA DEFINE THE LONDON INTER BANK OFFERED RATE (LIBOR) AS `THE AVERAGE INTEREST RATE ESTIMATED BY LEADING BANKS IN LONDON THAT THEY WOUL D BE CHARGED IF BORROWING FROM OTHER BANKS. IT HAS FUR THER BEEN EXPLAINED THAT LIBOR IS A BENCHMARK GIVING AN INDI CATION OF THE AVERAGE RATE AT WHICH A LIBOR CONTRIBUTOR BANK CAN OBTAIN UNSECURED FUNDING IN THE LONDON INTERBANK MARKET FO R A GIVEN PERIOD. INDIVIDUAL BBALIBOR RATES ARE THE END-PRODUCT OF A CALCULATION BASED UPON SUBMISSIONS FROM LIBOR CONTRIBUTOR BANKS, WHIC H ARE THEN AVERAGED UNDER A `TRIMMED MEAN METHODOLOGY. LIBO R RATES ARE CALCULATED FOR TEN CURRENCIES AND 15 BORROWING PERI ODS RANGING FROM OVERNIGHT TO ONE YEAR AND ARE PUBLISHED DAILY AT 11 .30 A.M. (LONDON TIME) BY THOMSON REUTERS. CURRENTLY 18 BANKS CONTRI BUTE TO THE FIXING OF THE US $ LIBOR. MODUS OPERANDI FOR CALCULATION OF LIBOR IS EXTRACTED AS UNDER :- LIBOR IS CALCULATED AND PUBLISHED BY THOMSON REUTE RS ON BEHALF OF THE BRITISH BANKERS ASSOCIATION (BBA) . IT IS AN INDEX THAT MEASURES THE COST OF FUNDS TO LARGE G LOBAL BANKS OPERATING IN LONDON FINANCIAL MARKETS OR WITH LONDON-BASED COUNTERPARTIES. EACH DAY, THE BBA SURVEYS A PANEL OF BANKS (18 MAJOR GLOBAL BANKS FOR THE USD LIBOR), ASKING THE QUESTION, AT WHAT RATE COUL D YOU BORROW FUNDS, WERE YOU TO DO SO BY ASKING FOR A ND THEN ACCEPTING INTER-BANK OFFERS IN A REASONABLE MA RKET SIZE JUST PRIOR TO 11 AM? THE BBA THROWS OUT THE HIGHEST 4 AND LOWEST 4 RESPONSES, AND AVERAGES THE REMAINING MIDDLE 10, YIELDING A 23% TRIMMED MEAN. THE AVERAGE IS REPORTED AT 11:30 A.M. ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 13 13. IT CAN BE SEEN THAT EACH LIBOR CONTRIBUTOR PAN EL BANK FORMULATES ITS OWN RATE FOR A DAY WHICH IS PUT INTO THE APPLICATION WHICH LINKS DIRECTLY TO A RATE SETTING TEAM AT THOM SON REUTERS. THEN TRIMMING IS DONE OF SUCH RATES SUBMITTED BY DIFFERE NT CONTRIBUTOR BANKS. AFTER EXCLUDING FOUR HIGHEST AND LOWEST RATE S, AN AVERAGE IS WORKED OUT, WHICH BECOMES LIBOR RATE. THUS IT IS E VIDENT THAT LIBOR IS NOT A RATE IN ITSELF WHICH IS CHARGED OR P AID FOR THE USER OF INTER BANK DEPOSITS. IT IS ONLY AN `AVERAGE OF THE RATES SUBMITTED BY VARIOUS PANEL BANKS, AFTER EXCLUSION OF FOUR EACH O F HIGHEST AND LOWEST RESPONSES, WHICH IS DAILY REPORTED AT 11:30 A.M. ALBEIT, TECHNICALLY SPEAKING IT IS ONLY ONE RATE, BUT IN RE ALITY, IT IS AN AVERAGE OF RATES AT WHICH VARIOUS BANKS BORROW OR LEND INTE R BANK DEPOSITS. RETURNING TO OUR CONTEXT OF RULE 10B(1)(A) READ WIT H SECTION 92C(2) PROVISO, IT CAN BE EASILY DEDUCED THAT THE LIBOR IS NOTHING BUT ARITHMETICAL MEAN OF RATES OF INTEREST CHARGED OR P AID ON INTER BANK DEPOSITS BY A NUMBER OF PANEL BANKS REPRESENTING DI FFERENT COMPARABLE UNCONTROLLED TRANSACTIONS. CONSIDERING THE LIBOR AS ONE COMPARABLE UNCONTROLLED INTEREST RATE, IN OUR C ONSIDERED OPINION IS A RESTRICTED AND NARROW APPROACH INCAPABLE OF AC CEPTANCE. FURTHER, SINCE THE LIBOR IS NOT A RATE IN ITSELF AT WHICH S OME BANK IS WILLING TO BORROW OR LEND, BUT AN AVERAGE OF RATES AT WHICH VARIOUS PANEL BANKS OFFER TO BORROW OR LEND INTER BANK OFFERS, TH E SAME CANNOT BE CHARACTERIZED AS ONE PRICE DETERMINED UNDER THE COM PARABLE UNCONTROLLED PRICE METHOD. IT IS REQUIRED TO BE CON SIDERED AS ARITHMETICAL MEAN OF SUCH PRICES, THEREBY MAKING AV AILABLE THE OPTION OF PLUS MINUS 5% VARIATION TO THE ASSESSEE. AS THE PRESENT ADDITION OF ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 14 ` 50,476 MADE BY THE AO WAS THE OUTCOME OF NOT ALLOWI NG PLUS MINUS 5% CUSHION, WHICH IN OUR CONSIDERED OPINION IS RICH LY DUE TO THE ASSESSEE, WE HOLD THAT THE LEARNED CIT(A) WAS JUSTI FIED IN DELETING THIS ADDITION. 14. THE LAST GROUND OF THE REVENUES APPEAL IS AGAI NST ALLOWING DEDUCTION OF HEAD OFFICE EXPENSES AMOUNTING TO ` 99,93,000. BRIEFLY STATED THE FACTS CONCERNING THIS GROUND ARE THAT TH E ASSESSEE MADE A PROVISION FOR HEAD OFFICE ADMINISTRATION EXPENSES A MOUNTING TO ` 99,93,000. THIS AMOUNT WAS ADDED BACK IN THE COMPUT ATION OF INCOME. THEREAFTER, A DEDUCTION WAS CLAIMED BY REST RICTING HEAD OFFICE EXPENSES TO 5% OF ADJUSTED TOTAL INCOME AMOU NTING TO ` 98,98,019. THE AO REFERRED THE MATTER OF COMPUTATIO N OF ALP OF HEAD OFFICE EXPENSES TO THE TPO. ON BEING CALLED U PON TO JUSTIFY THE DEDUCTIBILITY OF THESE EXPENSES AND ITS ALP, THE AS SESSEE STATED THAT HEAD OFFICE INCURRED SUCH EXPENSES ALLOCATED TO VAR IOUS BRANCHES ON A DETERMINED PERCENTAGE. THE TPO NOTICED THAT THE ASS ESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCE TO PROVE THE RENDER ING OF ANY SERVICES BY HEAD OFFICE FOR WHICH COMPENSATION WAS REQUIRED TO BE PAID. IN THE ABSENCE OF ANY BENEFIT DERIVED, THE TP O DETERMINED ALP OF SUCH ALLOCATED HEAD OFFICE EXPENSES AT NIL. THE LEARNED CIT(A) AGREED WITH THE SUBMISSIONS MADE ON BEHALF OF THE A SSESSEE AND DELETED THE SAID ADDITION. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS RELEVANT TO NOTE THAT, IN FACT, IT WAS A SUM OF ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 15 ` 2.12 CRORE WHICH WAS ATTRIBUTED BY THE HEAD OFFICE TO THE INDIAN BRANCH. HOWEVER, THE ASSESSEE CLAIMED DEDUCTION ON LY TO THE EXTENT PERMISSIBLE U/S 44C TO THE TUNE OF ` 98.98 LAKH BY RESTRICTING SUCH EXPENSES TO 5% OF THE ADJUSTED TOTAL INCOME. INSOF AR AS THE CONTENTION OF THE TPO THAT THE ASSESSEE DID NOT ADD UCE ANY EVIDENCE ABOUT THE INCURRING OF THIS EXPENDITURE IS CONCERNE D, WE FIND THAT THE SAME IS NOT CORRECT. PAGE NO.112 OF THE PAPER BOOK IS BILL ISSUED BY HEAD OFFICE ON THE ASSESSEE FOR S$773,129.40, BEING AUDIT FEES AND HEAD OFFICE EXPENSES FOR THE YEAR 2001. PAGE NO.113 IS DETAIL AND BASIS OF ALLOCATION OF SUCH EXPENSES. PAGE NO.114 I S HEAD-WISE DETAIL OF EXPENSES TOTALING S$763,220.40. ALL THESE DETAIL S WERE BEFORE THE TPO AS IS EVIDENT FROM PAGE NO.115 OF THE PAPER BOO K, BEING A COPY OF THE ASSESSEES LETTER TO THE TPO GIVING DETAILS OF SERVICES RENDERED BY THE HEAD OFFICE AND THE BENEFITS DERIVED BY THE ASSESSEE. AS SUCH, IT CANNOT BE SAID THAT THE ASSESSEE DID NOT FURNISH ANY BASIS OF ALLOCATION OF SUCH COSTS TO THE ASSESSEE. THAT BEIN G THE POSITION, THE VERY FOUNDATION OF THE TPOS EXERCISE IS WANTING. A S THERE IS SUFFICIENT MATERIAL JUSTIFYING THE PAYMENT MADE TO HEAD OFFICE TO THE TUNE OF ` 2.12 CRORE ATTRIBUTED BY THE HEAD OFFICE TO THE IND IAN BRANCH, AGAINST WHICH THE ASSESSEE CLAIMED DEDUCTION TO THE PERMISSIBLE EXTENT U/S 44C OF ` 98.98 LAKH, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS WARRANTED IN THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND IS NOT ALLOWED. ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 16 16. FIRST TWO GROUNDS OF THE ASSESSEES CROSS OBJEC TION HAVE BECOME ACADEMIC AND HENCE DO NOT SURVIVE IN VIEW OF OUR DE CISION ON GROUND NO.2 OF THE REVENUES APPEAL. 17. THE ONLY OTHER GROUND IS AGAINST THE CHARGIN G OF INTEREST U/S 234D. HERE ALSO THE CHALLENGE IS NOT TO THE OTHERWI SE CHARGEABILITY OF INTEREST BUT FOR THE PERIOD FROM WHICH INTEREST SHO ULD BE CHARGED. THE LEARNED AR CONTENDED THAT THE INTEREST U/S 234D SHO ULD HAVE BEEN CHARGED FROM 07.12.2004, BEING THE DATE ON WHICH I T ACTUALLY RECEIVED THE INTEREST INSTEAD OF 29.10.2004, BEING THE DATE ON WHICH REFUND WAS GRANTED. IN THIS CONTEXT SECTION 234D(1) IS RELEVANT, THE RELEVANT PART OF WHICH IS REPRODUCED AS UNDER:- 234D(1) SUBJECT TO THE OTHER PROVISIONS OF THIS AC T, WHERE ANY REFUND IS GRANTED TO THE ASSESSEE UNDER S UB- SECTION (1) OF SECTION 143, AND (A) NO REFUND IS DUE ON REGULAR ASSESSMENT; OR (B) THE AMOUNT REFUNDED UNDER SUB-SECTION (1) OF S ECTION 143 EXCEEDS THE AMOUNT REFUNDABLE ON REGULAR ASSESSMENT, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTERES T AT THE RATE OF [ONE-HALF] PER CENT ON THE WHOLE OR THE EXC ESS AMOUNT SO REFUNDED, FOR EVERY MONTH OR PART OF A MO NTH COMPRISED IN THE PERIOD FROM THE DATE OF GRANT OF REFUND TO THE DATE OF SUCH REGULAR ASSESSMENT. 18. THIS SECTION TALKS OF INTEREST ON EXCESS REFUND . THE DATES FROM AND UP TO WHICH SUCH INTEREST IS TO BE CHARGED HAVE BEEN SET OUT AT THE END OF THE PROVISION BEING FROM THE DATE OF GRANT OF REFUND TO THE DATE OF SUCH REGULAR ASSESSMENT. THE DISPUTE BEFOR E US ROTATES ONLY ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 17 AROUND THE DATE FROM WHICH INTEREST SHOULD BE CHARG ED. THE LEARNED AR CONTENDED THAT SUCH DATE SHOULD BE CONSIDERED AS THE DATE ON WHICH THE REFUND WAS ACTUALLY RECEIVED U/S 244A. O N THE OTHER HAND, THE CASE OF THE REVENUE IS THAT THE RELEVANT DATE I S THE DATE ON WHICH THE REFUND IS ISSUED BY THE DEPARTMENT. 19. AT THIS STAGE IT IS RELEVANT TO NOTE THAT INTER EST ON REFUNDS IS GRANTED UNDER SECTION 244A. SUB-SECTION (1) OF THI S SECTION PROVIDES THAT WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT, HE SHALL, SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ENTITLED TO RECEIVE, IN ADDITION TO THE SAID AMOUNT, SIMPLE INTEREST THEREON CALCULATED IN THE PRESCRIBED MANNER. CLAUSE (A) STI PULATES THAT WHERE THE REFUND IS OUT OF ANY TAX PAID, INTER ALIA PAID BY WAY OF ADVANCE TAX OR TREATED AS PAID UNDER SECTION 199, DURING TH E FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUCH INT EREST SHALL BE CALCULATED AT THE PRESCRIBED RATE FOR EVERY MONTH O R PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL O F THE ASSESSMENT YEAR TO THE ` DATE ON WHICH THE REFUND IS GRANTED . SIMILARLY, CLAUSE (B) PROVIDING FOR INTEREST IN ANY OTHER CASE, STATE S THAT SUCH INTEREST SHALL BE CALCULATED AT THE SPECIFIED RATE FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD OR PERIODS FROM THE D ATE OF PAYMENT OF THE TAX OR PENALTY ` TO THE DATE ON WHICH THE REFUND IS GRANTED . THUS IT IS MANIFEST THAT THE TERMINATING POINT FOR THE C ALCULATION OF INTEREST U/S 244A IS THE DATE ON WHICH THE REFUND IS GRANTED . IT IS AXIOMATIC THAT INVARIABLY THE ACTUAL DATE OF RECEIPT BY THE A SSESSEE WILL SUCCEED THE DATE OF GRANTING OR ISSUANCE OF REFUND. A CHEQ UE FOR REFUND WITH ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 18 INTEREST HAVING BEEN PREPARED IS SIGNED BY THE COMP ETENT AUTHORITY. AFTER MAKING DUE ENTRIES IN THE RECORD, IT GOES FOR DISPATCH AND ONLY THEREAFTER IT IS ACTUALLY RECEIVED BY THE ASSESSEE. ON RECEIPT, THE ASSESSEE DEPOSITS SUCH CHEQUE IN HIS BANK ACCOUNT W HICH FURTHER TAKES A FEW DAYS IN REALIZATION. SO, THERE IS BOUND TO BE SOME TIME GAP BETWEEN THE DATE OF GRANTING OF REFUND AND THE DATE OF RECEIPT OF SUCH REFUND. IN SUCH A SITUATION, THE ASSESSEE CANNOT C OME OUT WITH A CLAIM THAT INTEREST U/S 244A SHOULD BE ALLOWED UP TO THE DATE OF RECEIPT OF REFUND INSTEAD OF DATE OF GRANT OF REFUND AS PROVID ED FOR IN THE ACT. IF THE CONTENTION OF THE LD. AR IS ACCEPTED THAT THE W ORD `GRANT SHOULD BE READ AS `RECEIPT, THEN IN ALL CASES OF AWARDING INTEREST, THE DEPARTMENT WILL HAVE TO ISSUE REFUND VOUCHERS TWICE , VIZ., FIRSTLY UP TO THE DATE OF ISSUANCE OF REFUND VOUCHER AND SECON DLY, FROM SUCH DATE TO THE DATE ON WHICH THE ASSESSEE CAME IN SEISIN OF THE MONEY. THIS IS CLEARLY NEITHER THE INTENTION NOR THE PRESC RIPTION OF THE PROVISION. 20. IT IS OF PARAMOUNT IMPORTANCE TO NOTE THAT IN TEREST ON REFUND IS ONLY A STATUTORY RIGHT, WHICH CAN BE REGULATED STRI CTLY AS PER THE PRESCRIBED PROVISIONS. THERE CAN BE NO QUESTION OF GRANTING ANY INTEREST ON REFUND DE HORS THE RELEVANT PROVISIONS IN THE ACT. WE WANT TO ACCENTUATE ON THE PROVISO TO SECTION 244A(1)(A) WHICH STATES THAT NO INTEREST SHALL BE PAYABLE IF THE AMOUNT OF REFUN D IS LESS THAN TEN PER CENT OF THE TAX AS DETERMINED, INTER ALIA UNDER SUB-SECTION (1) OF SECTION 143 OR ON REGULAR ASSESSMENT. THUS, IF THE AMOUNT OF REFUND FALLS SHORT OF SUCH PERCENTAGE, THE ASSESSEE CANNOT CLAIM INTEREST AS A ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 19 MATTER OF RIGHT. THIS LEAD US TO THE LOGICAL CONCLU SION THAT THE QUESTION OF GRANT OF REFUND U/S 244A AND THE EX CONSEQUENTI CHARGING OF INTEREST ON REFUND U/S 234D CAN BE DETERMINED STRIC TLY AS PER THE STATUTORY PROVISIONS. THERE CAN BE NO QUESTION OF A CLAIM OF EQUITY OR FAIRNESS IN THIS CONNECTION, AT LEAST BEFORE THE TR IBUNAL, WHICH IS BOUND TO DECIPHER THE PROVISIONS OF THE ACT AS THEY EXIST . WHEN THE PAYMENT OF INTEREST U/S 244A IS CONTEMPLATED W.R.T THE DATE OF GRANT OF REFUND, THERE CAN BE NO QUESTION OF SUBSTITUTING SIMILAR EX PRESSION - `DATE OF GRANT OF REFUND - EMPLOYED U/S 234D WITH THE `DATE OF RECEIPT OF REFUND AS HAS BEEN ARGUED ON BEHALF OF THE ASSESSE E. IT IS AXIOMATIC THAT ONE WORD CANNOT BE UNDERSTOOD DIFFERENTLY IN T WO RELATED SECTIONS. WHEN THE WORD `GRANT CANNOT BE READ AS `R ECEIPT IN SECTION 244A, THE SAME CANNOT HAVE A DIFFERENT MEANING IN SECTION 234D. 21. THE LEGISLATURE CANNOT BE CONSIDERED AS OBLI VIOUS OF THE FINE DISTINCTION BETWEEN THE DATE OF GRANT OF REFUND A ND THE DATE OF RECEIPT OF REFUND. THESE TWO EXPRESSIONS HAVE DIFF ERENT CONNOTATIONS. WHEREAS THE FIRST REFERS TO THE DATE O N WHICH REFUND IS ISSUED, THE SECOND REFERS TO THE DATE ON WHICH IT I S ACTUALLY RECEIVED BY THE ASSESSEE. THE LEGISLATURE IN ITS WISDOM HAS EMPLOYED THE EXPRESSION DATE OF RECEIPT IN SEVERAL SECTIONS, S UCH AS SECTION 155(8A) BEFORE ITS OMISSION AND CERTAIN SECTIONS PR OVIDING EXEMPTION UNDER THE HEAD `CAPITAL GAINS. TO CLAIM THAT THE DATE OF RECEIPT OF REFUND SHOULD BE RECKONED AS A STARTING POINT INSTE AD OF THE DATE OF GRANT OF REFUND, IN OUR CONSIDERED OPINION, WOULD A MOUNT TO DOING VIOLENCE TO THE UNAMBIGUOUS LANGUAGE OF THE PROVISI ON. AS IT IS THE ITA NO.6631/M/2006 & CO 248/M/2009. THE DEVELOPMENT BANK OF SINGAPORE. 20 EXPRESSION `DATE OF GRANT OF REFUND WHICH HAS BEEN EMPLOYED U/S 234D, WHICH IN THE PRESENT CASE IS 29.10.2004, WE H OLD THAT THE INTEREST HAS BEEN RIGHTLY CHARGED FROM THIS DATE. T HIS GROUND IS, THEREFORE, NOT ALLOWED. 22. . /4 + , 5 63 / , +/ 78 9 - #( ./ , )*$ .+ , +/ 78 IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 17 TH DAY OF MAY, 2013. !3 , 012 :!(4 1 , ; SD/- SD/- (VIVEK VARMA) (R.S.SYAL) # ! # ! # ! # ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; :!( DATED : 17 TH MAY, 2013. DEVDAS* !3 !3 !3 !3 , )#/6' <'2/ , )#/6' <'2/ , )#/6' <'2/ , )#/6' <'2// COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. )*%& / THE RESPONDENT. 3. = () / THE CIT, MUMBAI. 4. = / CIT(A)-XXXI , MUMBAI 5. '@; )#/#( , , / DR, ITAT, MUMBAI 6. ;A B / GUARD FILE. !3( !3( !3( !3( / BY ORDER, *'/ )#/ //TRUE COPY// C C C C/ // /7 + 7 + 7 + 7 + ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI