MIZHUO CORPORATE BANK LTD, V. ADIT (IT) 4(1),

CO 46/MUM/2013

• Counselvise Citation: [2014] 112 COUNSELVISE.COM (IT) 3845 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 20-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ITA NO; MADHUR AGARWAL ITA NO CO
• Keywords: Double taxation relief; Period of limitation; Permanent establishment; Condonation of delay; Set aside
• Section: 143(3); 40(a)(ia); 195; 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL L , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI AMIT SHUKLA , J M IT A NO. 3282 / MUM/20 09 ( ASSESSMENT YEAR : 200 5 - 0 6 ) ADIT(INTERNATIONAL TAXATION) - 4(1), MUMBAI VS. M/S MIZUHO CORPORATE BANK LTD. MAKER CHAMBERS - III, 1 ST FLOOR, JAMNALAL BAJAJ ROAD, NARIMAN POINT, MUMBAI - 21 PAN/GIR NO. : A A D C M 0940 P ( APPELLANT ) .. ( RESPONDENT ) AND / MUM/20 13 ( ASSESSMENT YEAR :2005 - 06 ) M/S MIZUHO CORPORATE BANK LTD., MAKER CHAMBERS - III, 1 ST FLOOR, JAMNALAL BAJAJ ROAD, NARI MAN POINT, MUMBAI - 21 VS. ADIT(INTERNATIONAL TAXATION) - 4(1), MUMBAI PAN/GIR NO. : A ADCM 0940 P ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 602 / MUM/20 13 ( ASSESSMENT YEAR :2005 - 06 ) M/S MIZUHO CORPORATE BANK LTD., MAKER CHAMBERS - III, 1 ST FLOOR, JAMNALAL BAJAJ ROAD, NARIMAN POINT, MUMBAI - 21 VS. ADIT(INTERNATIONAL TAXATION) - 4(1), MUMBAI PAN/GIR NO. : A ADCM 0940 P ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MS. NEERAJA PRADHAN /ASSESSEE BY : MR. MADHUR AGARWAL ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 2 DATE OF HEARING : 19 TH FEBRUARY , 201 4 DATE OF PRONOUNCEMENT : 26 TH MARCH , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH ESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AS WELL AS CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 31 - 3 - 2009 FOR THE ASSESSMENT YEAR 2005 - 06, IN THE MATTER OF ORDER PASSED UND ER SECTION 143(3) OF THE I.T.ACT. IN THE APPEAL FILED BY THE REVENUE, FOLLOWING GROUNDS HAVE BEEN TAKEN : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN DIRECTING THE ASSESSING OF FICER TO ALLOW DEDUCTION OF RS.47,55,429/ - CLAIMED BY THE ASSESSEE AS HEAD OFFICE EXPENDITURE UNDER SECTION 44C OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS .35,17,964/ - MADE UNDER SECTION 40(A)(IA) OF THE ACT. 3. THE APPELLANT PRAYS THAT THE ORDER OF LD.CIT(A), MUMBAI ON THE ABOVE GROUNDS BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSE D. FACTS IN BRIEF ARE THAT ASSESSEE COMPANY IS INCORPORATED IN JAPAN AND HAVING BUSINESS OPERATION IN INDIA FROM 1996 THROUGH A BRANCH OFFICE IN MUMBAI. WHILE FRAMING ASSESSMENT UNDER SECTION 143(3), THE AO DISALLOWED INTEREST PAID TO HEAD OFFICE AMOUNTING TO RS.35,13,009/ - UNDER SECTION 40(A)(IA) . THE AO ALSO ADDED RS. 90,77,349/ - BEING INTEREST EARNED BY HEAD OFFICE. THE AO ALSO DISALLOWED HEAD OFFICE ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 3 EXPENDITURE OF RS. 47,65,429/ - , WHICH WAS CLAIMED BY THE ASSESSEE UNDER SECTION 44C OF THE I.T.ACT. 3 . DIS ALLOWANCE OF RS.47,65,429/ - UNDER SECTION 44C WAS MADE BY THE AO ON THE PLEA THAT EXPENDITURE HAS NOT BEEN ACTUALLY INCURRED BY THE ASSESSEE BRANCH OFFICE IN INDIA. THE AO FURTHER STATED THAT THESE EXPENDITURES WERE NOT DEBITED IN THE BOOKS OF ACCOUNT OF B RANCH OFFICE AND NO ENTRY AT ALL IS MADE IN ITS BOOKS OF ACCOUNTS, HOWEVER, SAME HAS BEEN CLAIMED AS EXPENDITURE IN THE STATEMENT OF INCOME ONLY. 4 . BY THE IMPUGNED ORDER, THE CIT(A) ALLOWED ASSESSEES CLAIM BY OBSERVING THAT EXPATRIATE EMPLOYEES WERE WOR KING IN INDIA FOR THE BUSINESS OPERATION OF THE ASSESSEE BRANCH IN INDIA. THEREFORE, EXPENDITURE M ET OUT BY THE HEAD OFFICE WITH REGARD TO THE BUSINESS OPERATION OF THE ASSESSEE BRANCH IN INDIA IS ALLOWABLE UNDER SECTION 44C OF THE ACT. THE CIT(A) FURTHER OBSERVED THAT IT IS IMMATERIAL WHETHER THE HEAD OFFICE RAISED A DEBIT NOTE ON BRANCH OFFICE WITH REGARD TO THE EXPENDITURE MET OUT BY THE HEAD OFFICE IN CONNECTION WITH BUSINESS OPERATIONS OF THE BRANCH OFFICE. THE PRECISE OBSERVATIONS OF THE CIT(A) ARE A S UNDER : - 5.5 I HAVE GONE THROUGH THE ISSUE AND THE APPELLANTS SUBMISSION. THE EXPATRIATE EMPLOYEES WORKING IN INDIA FOR THE BUSINESS OPERATION OF THE APPELLANT BRANCH IN INDIA. SO, CERTAINLY IT IS THE EXPENDITURE M ET OUT BY THE HEAD OFFICE WITH REGAR D TO THE BUSINESS OPERATION OF THE APPELLANT BRANCH IN INDIA . THIS IS THE ONLY REQUIREMENT NEEDED FOR ALLOWING DEDUCTION U/S.44C OF THE ACT. IT IS A WELL SETTLED PRINCIPLE THAT THE TAXING OF INCOME OR ALLOWING OF DEDUCTION FOR THE PURPOSE OF DETERMINING T HE TOTAL INCOME UNDER THE ACT HAS TO BE DONE AS PER THE PROVISIONS OF THE I.T.ACT AND NOT ON THE BASIS OF THE RECORDINGS MADE IN THE BOOKS ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 4 OF ACCOUNTS. IN VIEW OF THIS, IT IS IMMATERIAL WHETHER THE HEAD OFFICE RAISED A DEBIT NOTE ON BRANCH OFFICE WITH REGA RD TO THE EXPENDITURE MET OUT BY THE HEAD OFFICE IN CONNECTION WITH THE BUSINESS OPERATIONS OF THE BRANCH OFFICE. IN VIEW OF THIS, I DIRECT THE AO TO ALLOW THE DEDUCTION OF RS. 47,65,429/ - WHICH WAS CLAIMED BY THE APPELLANT AS HEAD OFFICE EXPENDITURE U/S.44 C OF THE ACT. 5 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT ASSESSEES BANK IS INCORPORATED IN JAPAN AND IS HAVING BUSINESS OPERATION IN INDIA THROUGH BRANCH OFFICE IN MUMBAI . IN THE STATEMENT OF INCOME FILED ALONG WITH THE RETUR N OF INCOME, THE ASSESSEE HAS CLAIMED DEDUCTION OF ACTUAL EXPENDITURE INCURRED BY THE HEAD OFFICE WHICH ARE ATTRIBUTABLE TO INDIA BRANCH ON ACCOUNT OF SALARY PAID TO THE EXPATRIATE STAFF WHO ARE WORKING IN INDIA BUT PART OF THEIR SALARY HAVE BEEN PAID BY T HE HEAD OFFICE IN JAPAN. WE FOUND THAT THE EXPATRIATES ARE PAYING FULL TAX ON THEIR GLOBAL SALARY IN INDIA. THE EXPENSES INCURRED BY THE HEAD OFFICE IS AN EXPENSES OF THE BRANCH AS THE EXPATRIATES WORKING IN INDIA ARE RENDERING SERVICES TO THE BRANCH IN IN DIA. THE AOS OBJECTION TO THE EFFECT THAT EXPENDITURE WAS NOT DEBITED IN THE BOOKS OF ACCOUNTS OF INDIA BRANCH, IS NOT RELEVANT IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KEDARNATH JUTE MILLS COMPANY LTD., 82 ITR 360 . THUS, THERE IS NO REQUIREMENT FOR RAISING DEBIT NOTE OR VOUCHER BY THE HEAD OFFICE ON THE BRANCH FOR CLAIMING DEDUCTION UNDER SECTION 44C OF THE I.T. ACT. THE FINDINGS RECORDED BY THE CIT(A) AT PARA 5.5 HAS NOT BEEN CONTROVERTED BY THE LEARNED DR BY BRIN ING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 5 INFIRMITY IN THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF EXPATRIATE SALARY . 6 . DURING THE COURSE OF ASSESSMENT, THE AO ALSO OBSERVED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.81,69, 614/ - AS AN EXPENDITURE ON ACCOUNT OF PAYMENT OF INTEREST TO THE HEAD OFFICE, WHICH ALSO INCLUDED PAYMENT OF RS. 35,13,949/ - REMITTED WITHOUT WITHHOLDING OF TAX. THE AO INVOKED PROVISIONS OF SECTION 40(A)(IA) AND DISALLOWED RS.35,13,949/ - . 7 . BY THE IMPUGN ED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM AFTER HAVING FOLLOWING OBSERVATIONS : - 6.18 I HAVE GONE THROUGH THE ISSUE. BRANCH OR PE WILL BE CONSIDERED AS IF A SEPARATE ENTITY ONLY FOR DETERMINING THE PROFITS EARNED BY THE PE. IT IS TO BE REMEMBERED THAT THE ASSESSMENT IS MADE ONLY ON THE APPELLANT COMPANY AND NOT ON THE BRANCH OF THE APPELLANT. I FULLY AGREE WITH THE APPELLANTS VIEW FOR APPLYING THE PROVISIONS OF SECTION 195 OF THE ACT, THERE SHOULD BE TWO LEGAL ENTITIES. THE PAYER AND PAYEE SHOULD BE TWO D ISTINCT LEGAL ENTITIES, OTHERWISE SECTION 195 CANNOT BE INVOKED. THE HONBLE ITAT KOLKATA SPECIAL BENCH IN THE ABN AMRO BANK (SUPRA) HAS HELD THAT SECTION 195 IS NOT APPLICABLE TO THE PAYMENTS MADE BY THE BRANCH TO HEAD OFFICE. THE SAME VIEW IS APPRECIATED BY THE HONBLE MUMBAI TRIBUNAL IN THE CASE MASHREQ BANK PLC (ITA NO .2153/MUM/01 FOR A.Y. 1996 - 07 ORDER DATED 13 - 04 - 2007) IN PARA .9 AND IT IS EXTRACTED BELOW: A PLAIN READING OF THE ABOVE PARAGRAPH INDICATES THAT WHILE THE SPECIAL BENCH HAS INDEED TAKEN NOTE OF THE ARGUMENT THAT IN TERMS OF THE PROVISIONS OF ARTICLE 7(3), THE PROVISIONS OF SECTION 40(A)(I) DO NOT APPLY, THE DECISION OF THE SPECIAL BENCH RESTS ON THE PRINCIPLE, AS LAID DOWN WHILE DEALING WITH NETHERLANDS TREATY, THAT PAYMENTS FROM SE L F TO SE L F CANNOT SADDLE THE ASSESSEE WITH TAX WITHHOLDING LIABILITY. WE ARE IN RESPECTFUL AGREEMENT WITH THE PRINCIPLE SO LAID DOWN BY THE SPECIAL BENCH. WE HAVE NOTED THAT THE TRIBUNAL HAS NOT GIVEN ANY FINDING - DIRECT OR EVEN INDIRECT APPROVING THE ARGUMENT THAT ARTIFICIAL DISALLOWANCES ARE NOT PERMISSIBLE UNDER THE PROVISIONS OF THE INDIA JAPAN TAX TREATY. THE SPECIAL BENCH HAS MERELY SPECULATED ABOUT THE REASONS OF THE ASSESSING OFFICERS STAND ABOUT NON DEDUCTION OF TAX AT ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 6 SOURCE AND HAS NOT ADJUDICATED UP ON THE SAME. THE SPECIAL BENCH DID NOT SEE, AND VERY APPROPRIATELY SO, ANY NEED TO ADJUDICATE ON THIS GROUND, BECAUSE IRRESPECTIVE OF WHETHER OR NOT PROVISIONS OF SECTION 40(A)(I) LAYING DOWN DISALLOWANCE OF EXPENDITURE IN RESPECT OF WHICH TAX WITHHOLDING LIABILITY IS NOT DISCHARGED BY THE ASSESSEE, APPLY TO THE ASSESSEE, THERE WAS NO TAX WITHHOLDING REQUIREMENT ON PAYMENTS FROM BRANCH OFFICE TO HEAD OFFICE, OR VICE VERSA. THE QUESTION ABOUT APPLICABILITY OF SECTION 40(A)(I) THEREFORE , WAS ENTIRELY ACADEMIC IN THIS CONTEXT 6.19 IN VIEW OF THE ABOVE, PROVISIONS OF SECTION 195 ARE NOT APPLICABLE FOR THE PAYMENTS MADE BY THE BRANCH TO HEAD OFFICE. NATURALLY, SECTION 40(A)(I) IS ALSO NOT APPLICABLE. THE A.O. IS DIRECTED TO DELETE THE ADDITION . 8 . THE REVENUE IS IN APPEAL AGAINST ORDER OF CIT(A) IN DELETING THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) . W E HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT DISALLOWANCE HAS BEEN MADE BY THE AO ON THE PLEA THAT BRANCH OFFICE IN INDIA HAS BEEN TREATED AS PERMANENT ESTABLISHMENT AND HAS FILED RETURN OF INCOME AS PER IT ACT. THE AO OBSERVED THAT ALTHOUGH THE BRANCH OFFICE IS AN EXTENSION OF HEAD OFFICE, BUT IT IS LOCATED IN INDIA, TAX JURISDICTION, AS PER ARTICLE 5 OF DTAA BETWEEN INDIA AND JAPAN PE INCLUDES THE BRAN CH OFFICE. THE AO FURTHER OBSERVED THAT ASSESSEE HAS PERMANENT ESTABLISHMENT IN THE FORM OF BRANCH OFFICE, THEREFORE, AS PER ARTICLE 7 OF DTAA, PROVIDES PERMANENT ESTABLISHMENT WILL BE TAXABLE IN INDIA FINALLY THE AO TREATED THE HEAD OFFICE AND BRANCH OFFI CE AS TWO DIFFERENT ENTITIES AS PER THE DOMESTIC LAW AS WELL AS DTAA, THEREFORE, DISALLOWED THE INTEREST PAYMENT FOR NON - DEDUCTION OF TAX UNDER SECTION 40(A)(IA) . WE FOUND THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF ABN AMRO BANK, 97 ITD 89 . RECENTLY THE ISSUE IS ALSO DEALT BY THE ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 7 ITAT SPECIAL BENCH AT MUMBAI IN THE CASE OF SUMITOMO MITSU BANKING CORP. 136 ITD 66 (MUM)(SB), WHEREIN IT HAS BEEN HELD INTEREST PAID BY THE INDIAN BRANCH OF THE ASSESSEE BANK TO ITS OV ERSEAS HEAD OFFICE IS NOT CHARGEABLE TO TAX IN INDIA. IT WAS FURTHER HELD THAT THE PROVISIONS OF SECTION 195 CONSEQUENTLY WOULD NOT BE ATTRACTED IN CASE OF SUCH PAYMENT OF INTEREST BY THE INDIAN BRANCH TO OVERSEAS HEAD OFFICE AND THE QUESTION OF DISALLOWAN CE OF THE SAID INTEREST BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) DOES NOT ARISE. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE SPECIAL BENCH, WE UPHELD THE IMPUGNED ORDER OF CIT(A) FOR DELETING THE DISALLOWANCE OF INTEREST MADE UNDER SECTION 40(A) (IA) OF THE I.T.ACT. 9 . THE AO HAS ALSO ADDED THE INTEREST INCOME OF RS. 90,77,349/ - EARNED BY THE HEAD OFFICE FROM BRANCH OFFICE. THE AO OBSERVED THAT HEAD OFFICE OF THE BANK IN JAPAN HAD RECEIVED INTEREST FROM THE BRANCH OFFICE IN INDIA, HAS NOT BEEN DI SCLOSED EITHER BY THE HEAD OFFICE OR BY THE BRANCH OFFICE. BY OBSERVING THAT THE BRANCH OFFICE WAS LIABLE TO WITHHOLD TAX ON IT AS PER SECTION 195 OF THE ACT AND SINCE NEITHER THE HEAD OFFICE NOR BRANCH OFFICE IN A REPRESENTATIVE CAPACITY HAS OFFERED THE I NTEREST INCOME TO TAX, THE AO BROUGHT THE SAME TO THE TAX. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ADDITION BY RELYING ON THE DECISION OF COORDINATE BENCH IN THE CASE OF DRESDNER BANK AG VS. ADDL. CIT, (2007) 108 ITD 375 (MUM) . AGAINST THE ABOVE ORD ER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 8 10 . WE FOUND THAT THERE WAS SUBSTANTIAL DELAY IN FILING THE APPEAL. IN SUPPORT OF THE REASONS FOR DELAY, THE ASSESSEE HAS FILED AFFIDAVIT OF CHARTERED ACCOUNTANT MR. A. KIRAN SUVARNA. IT WAS SUB MITTED THAT EXACTLY SIMILAR ISSUE WAS DECIDED BY THE CIT(A) IN THE IMMEDIATELY PRECEDING YEAR IN ASSESSEES BANK AND THE ORDER OF CIT(A) WAS CONFIRMED BY THE TRIBUNAL, THEREFORE, THE ASSESSEE WAS UNDER IMPRESSION THAT THIS GR OUN D RAISED DURING THE YEAR UND ER CONSIDERATION WAS ALSO DECIDED BY THE CIT(A) IN ITS FAVOUR. UNDER THESE CIRCUMSTANCES, IT WAS PRESUMED THAT THE CIT(A) DURING THE YEAR UNDER CONSIDERATION ALSO HAS ALLOWED THE SAME. IT WAS PRAYED THAT ASSESSEE COMPANY INADVERTENTLY AND MISTAKENLY DID NO T FILE ANY APPEAL AGAINST THE ORDER OF CIT(A) ON THIS MISTAKEN BELIEF THAT THE APPEAL HAS BEEN COMPLETELY ALLOWED BY THE CIT(A). IT WAS FURTHER SUBMITTED THAT ASSESSEE COMPANY HAD ALSO NOT RECEIVED FROM THE AO THE ORDER GIVING EFFECT TO THE ORDER OF THE CI T(A), WHICH WOULD HAVE INDICATED TO THE ASSESSEE COMPANY THAT THE APPEAL WAS NOT COMPLETELY ALLOWED BY THE CIT(A) . 11 . ON THE OTHER HAND, LEARNED SENIOR DR OPPOSED THE CONDONATION OF DELAY AND SUBMITTED THAT ASSESSEE HAS NOT FULLY EXPLAINED THE SUBSTANTI AL DELAY IN FILING THE APPEAL. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ACIT VS. PETROLEUM INDIA INTERNATIONAL, DECIDED IN ITA NO. 8086/MUM/2003 VIDE ORDER DATED 28 - 9 - 2012 , WHEREIN IT WAS HELD THAT ONUS ON THE ASSESSEE TO ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 9 EXPLAIN TO THE TRIBUNAL ABOUT THE SUFFICIENT CAUSE FOR THE DELAY AND THE TRIBUNAL SHOULD BE SATISFIED ABOUT THE SAID SUFFICIENT CASE. IT IS TRUE THAT THE WORDS SUFFICIENT CAUSE FOR NOT FILING THE CROSS OBJECTION WITHIN THE PERIOD OF LIMITATION, NO DOUBT IS TO BE APPLIED IN A REASONABLE MANNER BUT DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. PARTY HAS TO GIVE SATISFACTORY EXPLANATION. 12 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ISSUE TAKEN BY THE ASSESSEE IS COVERED IN FAVOU R OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YEAR . W ITH REGARD TO THE DELAY IN FILING APPEAL , W E HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. THE ISSUE IS WHETHER THE DELAY IN FILING OF APPEAL BY TH E ASSESSEE WAS ON ACCOUNT OF SUFFICIENT REASONS OR NOT. IF THE REASONS ARE FOUND TO BE SUFFICIENT AND BONA FIDE THE DELAY DESERVES TO BE CONDONED. BEFORE WE EVALUATE THE SUFFICIENCY OF THE REASONS, IT WOULD BE OF RELEVANCE TO KEEP IN MIND THE BROAD JUDICIA L THOUGHTS ON THE ISSUE . NO DOUBT FILING OF APPEAL IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSEE AND IS NOT AN AUTOMATIC PRIVILEGE, THEREFORE, THE ASSESSEE IS EXPECTED TO BE VIGILANT IN ADHERING TO THE MANNER AND MODE IN WHICH THE APPEALS ARE TO BE FILED IN TERMS OF THE RELEVANT PROVISIONS OF THE ACT. NEVERTHELESS, LIBERAL APPROACH HAS TO BE ADOPTED BY THE APPELLATE AUTHORITIES WHERE DELAYS HAVE OCCURRED FOR BONA FIDE ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 10 REASONS ON THE PART OF THE ASSESSEE OR REVENUE IN FILING APPEALS. IN MATTERS CONCER NING THE FILING OF APPEALS, IN EXERCISE OF THE STATUTORY RIGHT, A REFUSAL TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD WHICH WOULD LEAD TO MISCARRIAGE OF JUSTICE. THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF IT S POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 13 . THE HON'BLE APEX COURT IN THE CELEBRATED DECISION IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST . KATIJI & ORS. 167 ITR 4 71 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JUSTICE. THIS IS FOR THE REASON THAT AN OPPOSING PARTY IN A DISPUTE CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON - DELIBERATE DELAY . THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAYS A JUDICIOUS AND LIBERAL APPROACH IS TO BE ADOPTED. IF SUFFICIENT CAUSE I S FOUND TO EXIST WHICH IS BONA FIDE AND NOT DUE TO NEGLIGENCE OF THE APPLICANT, THE DELAY NEEDS TO BE CONDONED IN SUCH CASES. THE EXPRESSION 'SUFFICIENT CAUSE' IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN MEANINGFUL MANNER WHICH SUBSERVES THE END OF JUSTICE - THAT BEING THE LIFE ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 11 PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED . HON'BLE SUPREME COURT IN CASE OF VEDABHAI VIS SANTAR AM, 253 ITR 798 HAD OBSERVED THAT INORDINATE DELAY CALLS FOR CAUTIONS APPROACH. THIS MEANS THERE SHOULD BE NO MALAFIDE OR DILATORY TACTICS. 'SUFFICIENT CAUSE' SHOULD RECEIVE LIBERAL CONSTRUCTION TO ADVANCE SUBSTANTIAL JUSTICE. 14 . THE HON'BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI: 167 ITR 471 OBSERVED AS UNDER: '3. THE LEGISLATURE HAS CONFERRED THE POWER TO CONDONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 1963 IN ORDER TO ENABLE THE COURTS TO DO SUBSTA NTIAL JUSTICE TO PARTIES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION 'SUFFICIENT CAUSE' EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHICH SUBSERVES THE ENDS OF JUSTICE THAT BEING T HE LIFE - PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS . IT IS COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN MATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTH ERS COURTS IN THE HIERARCHY. 15. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL VS . SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE COURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 12 CASE KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION ' SUFFICIENT CAUSE', THE PRINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PRIME IMPORTANCE. THE COURT HELD THAT THE EXPRESSION 'SUFFICIENT CAUSE' SHOULD RECEIVE LIBERAL CONSTRUCTION . IN VIEW OF THE ABOVE DISCUSS ION, WE CONDONE THE DELAY IN THE INTEREST OF SUBSTANTIAL JUSTICE. 1 6 . THE ISSUE WITH REGARD TO ADDITION OF INTEREST INCOME EARNED BY THE HEAD OFFICE FROM THE BRANCH OFFICE HAD ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN FAVOUR OF THE AS SESSEE BY RELYING ON THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF SUMITOMO MITSU BANKING CORP. 136 ITD 66 (MUM)(SB) , WHEREIN IT WAS HELD THAT INTEREST PAID BY INDIAN BRANCH OF THE ASSESSEE BANK TO ITS OVERSEAS HEAD OFFICE IS NOT CHARGEABLE TO TAX IN INDIA. THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.7479/MUM/2007, VIDE ORDER DATED 25 - 7 - 2012, HAS HELD AS UNDER : - THE LD. DR, HOWEVER, HAS FAIRLY AND FRANKLY CONCEDED THAT BOTH THE ISSUES INVOLVED IN THIS APPEAL OF THE REVENUE ARE SQUARELY COVERED B Y THE RECENT DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF SUMITOMO MITSU BANKING CORP. VS. DDIT 136 ITD 66 (MUM)(SB) WHEREIN IT HAS BEEN HELD THAT INTEREST PAID BY THE INDIAN BRANCH OF THE ASSESSEE BANK TO ITS OVERSEAS HEAD OFFICE IS NOT CHARGE ABLE TO TAX IN INDIA. AS FURTHER HELD BY THE SPECIAL BENCH IN THE SAID CASE, THE PROVISIONS OF SEC.195 CONSEQUENTLY WOULD NOT BE ATTRACTED IN CASE OF SUCH PAYMENT OF INTEREST BY THE INDIAN BRANCH TO OVERSEAS HEAD OFFICE AND THE QUESTION OF DISALLOWANCE OF THE SAID INTEREST BY INVOKING THE PROVISIONS OF SEC.40(A)(I) DOES NOT ARISE. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (A) GIVING RELIEF TO THE ASSESSEE ON BOTH THE ISSUES INVOLVED IN THIS APPEAL OF THE REVENUE AND DISMISS THE SAID APPEAL. ITA NO. 3282/09, CO46/13 & ITA NO.602 /20 13 13 1 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. THE CROSS OBJECTION FILED BY THE ASSESSEE BEING INFRUCTUOUS, IS HEREBY DISMISSED IN LIMINE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH MARCH . 201 4 . 26 TH MARCH ,2014 SD/ - SD/ - ( ) ( AMIT SHUKLA ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 26 / 0 3 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//