THE ADIT(IT) 3(2), MUMBAI V. M/S. BANK OF BAHRAIN & KUWAIT BSC, MUMBAI

ITA 1034/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1127 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: L1
• Next Hearing Date: 31-05-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 11-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BALKRISHNA
• Assessee Lawyers: K K VED
• Keywords: Question of law; Set aside
• Section: 244A; 143(1); 250; 191; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L-1 MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYAR AGHAVAN (JM) ITA NOS. 1034, 1035 & 1036/MUM/2008 ASSESSMENT YEARS-2001-02 & 2002-03 THE ADIT(I.T.) 3(2), SCINDIA HOUSE, N.M. ROAD, MUMBAI -400 038 VS. BANK OF BAHRAIN & KUWAIT BSC, JOLLEY MAKER CHAMBERS II, 225, NARIMAN POINT, MUMBAI-400 021 PAN AAACB2140F (APPELLANT) (RESPONDENT) C.O. NO. 94/MUM/2008 (ARISING OUT OF ITA NO. 1035 /MUM/2008 ASSESSMENT YEAR- 2002-03 BANK OF BAHRAIN & KUWAIT BSC, JOLLEY MAKER CHAMBERS II, 225, NARIMAN POINT, MUMBAI-400 021 PAN AAACB2140F VS. THE ADIT(I.T.) 3(2), SCINDIA HOUSE, N.M. ROAD, MUMBAI -400 038 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BALKRISHNA RESPONDENT BY: SHRI K.K. VED O R D E R PER BENCH THESE THREE APPEALS ARE FILED BY THE REVENUE AND T HE CROSS OBJECTION IS FILED BY THE ASSESSEE. THE APPEALS ARE DIRECTED AGAINST THE ORDERS DT. 30.11.2007 PASSED BY THE LD. CIT(A)-XXXI II, MUMBAI FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03. SINCE ISSUES ARE COMMON IN THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. BANK OF BEHRAIN 2 ITA NO. 1034/MUM/2008- A.Y. 2001-02 2. THE LD. CIT(A) HAS PASSED THE ORDER DT. 30.11.20 07 ON THE APPEAL WHICH HAS BEEN INSTITUTED AGAINST THE ORDER PASSED U/S. 154 OF THE IT ACT 1961 DT. 19.1.2007 FOR THE A.Y. 2001-02. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). 4. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THA T THE REFUND U/S. 143(1) WAS GRANTED TO THE ASSESSEE ON 28.2.2003 ON WHICH DATE THE PROVISIONS OF SEC. 234D HAD NOT COME ON THE STATUTE . SECTION 234D WAS INSERTED BY THE FINANCE ACT, 2003 W.E.F. 1.6.2003. HENCE THEY ARE NOT LIABLE TO PAY INTEREST U/S. 234D. THE ASSESSEE PLA CED RELIANCE ON THE DECISIONS OF GLAXO SMITHKLINE ASIA (P) LTD. VS ACIT 97 TTJ 108 (DEL), CYBERTECH SYSTEMS & SOFTWARE LTD. VS ACIT, 7 SOT 23 0 (MUM) AND VAN OORD DREDGING & MARINE CONTRACTORS BV VS DDIT 105 I TD 97 (MUM). THE ASSESSEE SUBMITTED THAT INTEREST U/S. 234 CANNO T BE CHARGED IN THIS CASE. 5. THE LD. CIT(A) HELD AS FOLLOWS: IN THIS CASE, THE RETURN WAS PROCESSED U/S. 143(1) AND THE REFUND WAS ISSUED ON 28.2.2003 I.E. PRIOR TO SEC. 234D COMING INTO FORCE. RESPECTFULLY FOLLOWING THE HON BLE ITAT DECISION IN THE CASE OF GLAXO SMITHKLINE ASIA (P) L TD VS ACIT 97 TTJ 108, THE AO IS DIRECTED NOT TO CHARGE INTERE ST U/S. 234D OF THE I.T. ACT, 1961 IF THE REFUND WAS ISSUED TO THE ASSESSEE BEFORE 1.6.2003. 6. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE SHRI BALKRIS HNA PLACED THE ORDER OF THE KERALA HIGH COURT IN THE CASE OF CIT V S KERALA CHEMICALS & PROTEINS LTD., WHEREIN THE QUESTION INVOLVED WAS AS FOLLOWS: BANK OF BEHRAIN 3 WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS NOT LIABLE TO PAY INTEREST U/S. 234D ON EXCESS REFUND GRANTED WHILE SENDING INTIMATION U/S. 143(1) OF THE ACT FOR THE ASSESSMENT YEAR 1999-2000. 8. THE HIGH COURT HELD AS FOLLOWS: HOWEVER, WE VACATE THE FINDING OF THE TRIBUNAL THA T SEC. 234D IS APPLICABLE ONLY FROM THE A.Y. 2004-05 ONWAR DS. THE VIEW TAKEN BY THE A.O THAT SEC. APPLIES FROM 1.6.20 03 IS THE CORRECT POSITION. 9. THE LD. COUNSEL FOR THE ASSESSEE SHRI K.K. VED R ELIED ON THE JUDGEMENT OF THE BOMBAY HIGH COURT IN THE CASE OF C IT VS BAJAJ HINDUSTAN LTD., WHEREIN THE QUESTION INVOLVED WAS A S FOLLOWS: WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ITAT WAS RIGHT IN HOLDING THAT THE INTEREST U/S. 234D CANNOT BE CHARGED IN RESPECT OF REFUNDS GRANTED PRI OR TO 1.6.2003? 10. IN THIS REGARD THE BOMBAY HIGH COURT HELD AS FO LLOWS: SO FAR AS THE LAST QUESTION IS CONCERNED, IT IS SE EN THAT THE SUBJECT PROVISION CAME ON STATUTE BOOK W.E.F. 1.6.2 003. IF THAT BE SO, THE SAID PROVISION DOES NOT HAVE RETROSPECTI VE EFFECT. IN THIS VIEW OF THE MATTER, WE DO NOT SEE APPEAL GIVIN G RISE TO ANY SUBSTANTIAL QUESTION OF LAW. APPEAL IS, THEREF ORE, DISMISSED IN LIMINI WITH NO ORDER AS TO COSTS. 11. WE FIND THAT THE ISSUE BEFORE US IS SQUARELY CO VERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS BAJA J HINDUSTAN LTD., (SUPRA). 12. THE KERALA HIGH COURT DECISION IN THE CASE OF C IT VS KERALA CHEMICALS & PROTEINS LTD. (SUPRA) RELIED ON BY THE LD. DEPARTMENTAL REPRESENTATIVE IS NOT APPROPRIATE TO THE PRESENT IS SUE. RESPECTFULLY BANK OF BEHRAIN 4 FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VS BAJAJ HINDUSTAN LTD., WE DISMISS THE REVENUES A PPEAL. ITA NO. 1035/MUM/2008- A.Y. 2001-02 13. THE LD. CIT(A) HAS PASSED THE ORDER DT. 30.11.2 007 ON THE APPEAL WHICH HAS BEEN INSTITUTED AGAINST THE ORDER PASSED U/S. 250 OF THE IT ACT 1961 DT. 8.2.2007 FOR THE A.Y. 2002-03. 14. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) 15. BEFORE THE LD. CIT(A), THE LD. AR OF THE ASSES SEE REITERATED THE SUBMISSION SIMILAR TO THAT AT PARA 4 IN ITA NO. 103 4/M/08. 16. THE LD. CIT(A) HELD AS FOLLOWS: IN THIS CASE, THE RETURN WAS PROCESSED U/S. 143(1) AND THE REFUND WAS ISSUED ON 20.2.2003 I.E. PRIOR TO 1.6.2 003 I.E. PRIOR TO SEC. 234D COMING INTO FORCE. RESPECTFULLY FOLLOWING THE HONBLE ITAT DECISION IN THE CASE OF GLAXO SMIT HKLINE ASIA (P) LTD VS ACIT 97 TTJ 108, THE AO IS DIRECTED NOT TO CHARGE INTEREST U/S. 234D OF THE I.T. ACT, 1961 IF THE REF UND WAS ISSUED TO THE ASSESSEE BEFORE 1.6.2003. 17. SINCE THE ISSUE IN ITA NO. 1034/M/08 AND IN THE PRESENT APPEAL I.E. 1035/M/08 IS IDENTICAL, PARAS 6 TO 12 IN ITA 1 034/M/08 HAS TO BE FOLLOWED. THEREFORE, THE REVENUES APPEAL IN ITA N O. 1035/M/08 IS DISMISSED. ITA NO. 1036/MUM/2008- A.Y. 2001-02 18. THE APPEAL HAS BEEN INSTITUTED AGAINST THE ORDE R PASSED U/S. 154 OF THE I.T. ACT, 1961 DT. 3.5.2007 FOR THE A.Y. 200 2-03. BANK OF BEHRAIN 5 19. AGGRIEVED, ASSESSEE PREFERRED AND APPEAL BEFORE THE LD. CIT(A). 20. BEFORE THE LD. CIT(A), THE LD. AR OF THE ASSES SEE REITERATED THE SUBMISSION SIMILAR TO THAT AT PARA 4 IN ITA NO. 10 34/M/08. 21. THE LD. CIT(A) HELD AS FOLLOWS: IN THIS CASE, THE RETURN WAS PROCESSED U/S. 143(1) AND THE REFUND WAS ISSUED ON 20.2.2003 I.E. PRIOR TO 1.6.2 003 I.E. PRIOR TO SEC. 234D COMING INTO FORCE. RESPECTFULL Y FOLLOWING THE HONBLE ITAT DECISION IN THE CASE OF GLAXO SMIT HKLINE ASIA (P) LTD VS ACIT 97 TTJ 108, THE AO IS DIRECTED NOT TO CHARGE INTEREST U/S. 234D OF THE I.T. ACT, 1961 IF THE REF UND WAS ISSUED TO THE ASSESSEE BEFORE 1.6.2003. 22. SINCE THE ISSUE IN ITA NO. 1034/M/08 AND THE PR ESENT APPEAL I.E. 1036/M/08 ARE IDENTICAL, PARAS 6 TO 12 IN ITA 1034 /M/08 HAS TO BE FOLLOWED. THEREFORE, THE REVENUES APPEAL IN ITA N O. 1036/M/08 IS DISMISSED. C.O. NO. 94/M/2008 A.Y. 2002-03 23. THE GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTION READS AS FOLLOWS: THE LD. CIT(A) ERRED IN NOT ADJUDICATING ON THE FO LLOWING GROUND OF APPEAL OF THE RESPONDENT, HOLDING THAT THE GROUND I S NOT ARISING FROM THE ORDER PASSED BY THE AO AND THAT THE RESPONDENT IS NOT CLEAR ABOUT WHAT HE WANTS:- THAT THE ADIT ERRED IN NOT CORRECTLY COMPUTING THE INTEREST PAYABLE U/S./ 244A OF THE ACT ON THE REFUND OF TAXE S DUE TO THEM 24. THE LD. CIT(A) HAS HELD AS FOLLOWS: THE APPELLANT PRAY THAT THE AO BE DIRECTED TO RE-C OMPUTE THE INTEREST U/S. 244A IN ACCORDANCE WITH THE LAW UPTO THE DATE OF RECEIPT OF THE REFUND. THE APPELLANTS ALSO SUBMIT THAT THEY ARE BANK OF BEHRAIN 6 ENTITLED TO COMPENSATION ON THE INTEREST WHICH HAS BEEN WRONGFULLY RETAINED. RELIANCE WAS PLACED ON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK AS IA LTD. 280 ITR 643, INSTRUCTION NO. 2/2007 DT. 28.3.2007 I SSUED BY THE CBDT AND THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS PFIZER LTD. 191 ITR 626. I FIND THAT THIS GROUND IS NOT ARISING FROM THE OR DER PASSED BY THE AO SO THIS GROUND OF APPEAL IS NOT AD JUDICATED UPON. 25. WE FIND THAT THE ASSESSEE HAS RAISED GROUND NO. 8 SPECIFICALLY BEFORE THE LD. CIT(A) THAT THE ACIT SHOULD BE DIREC TED TO COMPUTE AND GRANT TO THE ASSESSEE THE INTEREST PAYABLE U/S. 244 A OF THE ACT ON THE REFUND OF TAXES DUE, IN ACCORDANCE WITH LAW. THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED U/S. 250 F OR THE A.Y. 2002-03 DT. 8.2.2007 WHEREIN THE INTEREST U/S. 244A HAS BEE N DETERMINED AT RS. 52,28,420/-. THEREFORE WE DIRECT THE AO TO RECOMPUT E INTEREST U/S. 244A IN ACCORDANCE WITH LAW UPTO THE RECEIPT OF THE REFU ND AFTER CONSIDERING THE DECISION IN THE CASE OF SANDVIK ASIA LTD. 280 I TR 643, CIT VS PFIZER LTD. 191 ITR 626 AND THE INSTRUCTION NO. 2/2007 DT. 28.3.2007 ISSUED BY THE CBDT. THEREFORE WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 26. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 16 TH DAY OF JULY, 2010 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 16 TH JULY, 2010 RJ BANK OF BEHRAIN 7 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR L-1 BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI BANK OF BEHRAIN 8 DATE INITIALS 1 DRAFT DICTATED ON: 12.7.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 13.7 .2010 ______ SR. PS/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: _________ ______