State Bank of Mysore, Bangalore V. CIT, Bangalore

ITA 1148/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63856 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 24-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIII
• Assessee Lawyers: S ANANTHA PADMANABHAN
• Section: 143(3); 260A; 263; 154

Judgement Text

PAGE 1 OF 6 ITA NO.1 148/BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1148/BANG/2011 (ASST. YEAR 2003-04) M/S STATE BANK OF MYSORE, HEAD OFFICE, P B NO.9727, K G ROAD, BANGALORE-560 254. PA NO. AACCS 0155 P VS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE- 12(3), BANGALORE. (APPELLANT) (RESPONDENT) DATE OF HEARING : 21.11.2012 DATE OF PRONOUNCEMENT : 14.12.2012 APPELLANT BY : SHRI S ANANTHA PADMANABHAN, C. A. RESPONDENT BY : SHRI ETWA MUNDA, CIT-III OR DER PER GEORGE GEORGE : THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DI RECTED AGAINST THE ORDER OF THE CIT(A)-LTU, BANGALORE DATED 28.09. 2011. THE RELEVANT ASSESSMENT YEAR IS 2003-04. 2. THE SOLITARY ISSUE THAT ARISE FOR OUR CONSIDERAT ION IS WHETHER THE CIT(A) IS JUSTIFIED IN UPHOLDING THE ASSESSING OFFICERS ACTION IN LEVYING INTEREST UNDER SECTION 234D OF THE ACT. 3. THE BRIEF FACTS IN RELATION TO THE ABOVE CASE A RE AS FOLLOWS:- PAGE 2 OF 6 ITA NO.1 148/BANG/2011 2 THE ASSESSEE IS A SUBSIDIARY OF STATE BANK OF INDI A AND GOVERNED BY THE STATE BANK OF INDIA (SUBSIDIARY BANKS ) ACT, 1959. THE REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 27/3/2006. AGGRIEVED, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE FIRST APPELLATE AUTHORITY PASSED ORDER ON 22/6/2007 WHEREIN THE APP EAL WAS ALLOWED IN PART. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX PASSED A REVISION ORDER UNDER SECTION 263 OF THE ACT VIDE ORDER DATED 25/3/2008. CONSEQUENT TO THE COMMISSIONERS ORDER, THE ASST. C OMMISSIONER OF INCOME TAX PASSED AN ORDER UNDER SECTION 143 RWS 263 OF TH E ACT DATED 31/7/2008, WHEREIN HE HAD MADE VARIOUS DISALLOWANCE S/ADJUSTMENTS AND ALSO LEVIED INTEREST UNDER SECTION 234D OF THE ACT. 4. AGGRIEVED BY THE LEVY OF INTEREST UNDER SECTION 2 34D OF THE ACT AMOUNTING TO RS.97,27,876/-, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY RAISING THE FOLLOWING GROUNDS:- A) THE LEARNED ACIT ERRED BY LEVYING INTEREST UNDER SECT ION 234D OF THE ACT FOR A SUM OF RS.97,27,876/- FOR THE ASSESSMENT YEAR 2003-04. B) THE LEARNED ACIT OUGHT TO HAVE OBSERVED THAT THE PROVISIONS OF SECTION 234D WERE INTERESTED ONLY WITH EFFECT FROM 1 ST JUNE, 2003 BY THE FINANCE ACT, 2003 AND THEY WOULD BE APPLICABLE FOR ASSESSMENT YEAR 2004-05 AND THEREAFTER. C) THE LEARNED ACIT OUGHT TO HAVE PLACED RELIANCE ON T HE DECISION OF THE SPECIAL BENCH [ITO V EKTA PROMOTERS PVT. LTD. 177 TTJ 289 (DEL-SB)]. PAGE 3 OF 6 ITA NO.1 148/BANG/2011 3 5. THE CIT(A) DISMISSED THE APPEAL HOLDING THAT TH E LEVY OF INTEREST UNDER SECTION 234D IS MANDATORY AND PURELY C ONSEQUENTIAL IN NATURE AND THE ASSESSING OFFICER WAS DIRECTED TO RE-COMPUT E THE SAME IN ACCORDANCE WITH LAW. 6. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS:- I) THE LEARNED CIT(A) ERRED IN UPHOLDING THE CONTENTIO N OF THE ASSESSING OFFICER THAT THE INTEREST UNDER SECTI ON 234D IS LEVIABLE FOR THE ASSESSMENT YEAR 2003-04. II) THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT THE PROVISIONS OF SECTION 234D WERE INSERTED ONLY WITH EFFECT FROM 1 ST JUNE, 2003 BY THE FINANCE ACT, 2003 AND THEY WOULD BE APPLICABLE FOR ASSESSMENT YEAR 2004-05 AND THE SUBSEQUENT ASSESSMENT YEARS. III) THE LEARNED CIT(A) OUGHT TO HAVE PLACED RELIANCE ON THE DECISION OF THE HONBLE SPECIAL BENCH OF DELHI IN T HE CASE OF EKTA PROMOTERS PVT. LTD. (117 TTJ 289) WHEREIN I T WAS HELD THAT SECTION 234D IS ONLY PROSPECTIVE IN NATURE AND ACCORDINGLY WOULD BE APPLICABLE ONLY FOR THE ASSESSME NT YEAR 2004-05 AND THEREAFTER. IV) THE LEARNED CIT(A) OUGHT TO HAVE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRECEDENTS THAT HAVE FOLLOWED TH E ABOVE SAID DECISION OF THE HONBLE SPECIAL BENCH IN THE CASE OF EKTA PROMOTERS PVT. LTD.: [SONY INDIA (P) LTD. V DCIT 114 ITD 448; 118 TTJ 865; 315 ITR 150 (DELHI ITAT)] [ACIT V WILSON AND CO. LTD. 121 TTJ 258 (CHENNAI ITAT)] [AT AND T COMMUNICATION SERVICES INDIA (P) LTD. V DCIT 119 TTJ 943; 2008 26 SIOT 353 (DELHI ITAT)] PAGE 4 OF 6 ITA NO.1 148/BANG/2011 4 [TOURISM FINANCE CORPORATION OF INDIA V JCIT 128 TTJ 43; 2009 31 SOT 495 (DELHI ITAT)] [KOPMAF FINANCIAL SERVICES LTD. V ITO 132 TTJ 359 (MUMBAI ITAT)]. 7. THE LEARNED DR PRESENT WAS DULY HEARD. 8. ON PERUSAL OF NEITHER THE ASSESSMENT ORDER NOR THE APPELLATE ORDER, IT IS NOT CLEAR THE PERIOD FOR WHICH INTERES T UNDER SECTION 234D HAS BEEN LEVIED AND WHETHER INTEREST IS CALCULATED FROM 1/6/2003 UP TO THE DATE OF THE COMPLETION OF THE ASSESSMENT UNDER SECTION 1 43(3) OF THE ACT. 8.1 THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT & ANR. V FANUC INDIA LTD., REPORTED IN 244 CTR (KAR.) 529, HAD HEL D THAT NO INTEREST UNDER SECTION 234D COULD BE LEVIED FOR A PERIOD PRIOR TO INTRODUCTION OF SECTION 234D (W.E.F. 1 ST JUNE, 2003). IN THE CASE CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT, THE ASSESSMENT WAS COMPL ETED UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 1999-2000 ON 20 TH DECEMBER, 2004 DETERMINING THE TAX PAYABLE AT RS.5,41,47,331/- , WHEREIN INTEREST UNDER SECTION 234D WAS CALCULATED ONLY FROM 1 ST JUNE, 2003 ONWARDS AND NOT FROM THE DATE OF ISSUE OF REFUND WHICH WAS IN MARCH , 2002. THE ASSESSING OFFICER TREATED THIS AS A MISTAKE APPARENT FROM THE RECORD AND ACCORDINGLY, ISSUED A NOTICE UNDER SECTION 154 OF THE ACT. THE ASSESSEE CONTESTED THE SAID PROCEEDINGS BY CONTENDING THAT SINCE SECTION 23 4D WAS INSERTED INTO THE STATUTE W.E.F. 1 ST JUNE, 2003, NO INTEREST UNDER THE SAID SECTION IS LEVIABLE FROM ANY EARLIER DATE. HOWEVER, THE SAID C ONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT IF THE ORDER PAGE 5 OF 6 ITA NO.1 148/BANG/2011 5 REDUCING THE REFUNDS IS PASSED AFTER 1 ST JUNE, 2003, THE SAID PROVISION IS ATTRACTED AND INTEREST IS PAYABLE FROM THE DATE OF R EFUND AND NOT FROM THE DATE OF INTRODUCTION OF SECTION 234D. AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 154 OF THE A CT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE APPELLA TE AUTHORITY HELD THAT INTEREST IS NOT LEVIABLE FROM THE DATE OF REFUND AN D IT IS PAYABLE ONLY FROM 1 ST OF JUNE, 2003 AND THEREFORE, HE SET ASIDE THE ORDE R PASSED UNDER SECTION 154 OF THE ACT. AGGRIEVED BY THE SAME, THE REVENUE P REFERRED AN APPEAL BEFORE THE TRIBUNAL, WHICH WAS DISMISSED AND THEREA FTER, AN APPEAL UNDER SECTION 260A OF THE ACT WAS FILED BEFORE THE HONBL E HIGH COURT OF KARNATAKA. THE HONBLE HIGH COURT OF KARNATAKA ANSW ERED THE QUESTION IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS NOT LIABLE TO PAY INTEREST FROM THE DATE OF REFUND AND LIABILITY ARISE ONLY FROM 1 ST JUNE, 2003 WHEN SECTION 234D CAME INTO FORCE. 8.2 THE HONBLE KERALA HIGH COURT IN THE CASE OF C IT V KERALA CHEMICALS AND PROTEINS LTD. REPORTED IN 323 ITR 584 HAS ALSO HELD THAT INTEREST IS LEVIABLE UNDER SECTION 234D OF THE ACT W.E.F. 1 ST JUNE, 2003 AND NOT FROM THE DATE OF REFUND. IN THAT CASE, REFUND WAS ISSUED ALONG WITH INTIMATION UNDER SECTION 143(1) OF THE ACT ON 28 TH JUNE, 2000 AND REGULAR ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 22 ND JANUARY, 2004. THE HONBLE HIGH COURT HELD THAT WHILE CALCULATING INTE REST, DEMAND COULD BE RAISED ONLY FROM 1 ST JUNE, 2003 UP TO THE COMPLETION OF ASSESSMENT UNDE R SECTION 143(3) OF THE ACT. PAGE 6 OF 6 ITA NO.1 148/BANG/2011 6 9. IN VIEW OF THE ABOVE JUDGMENTS OF THE HONBLE J URISDICTIONAL HIGH COURT AND THE HONBLE KERALA HIGH COURT, THE I SSUE IS RESTORED TO THE FILED OF THE ASSESSING OFFICER FOR RECALCULATING TH E INTEREST UNDER SECTION 234D OF THE ACT IN ACCORDANCE WITH THE PRINCIPLE EN UNCIATED IN THE ABOVE MENTIONED JUDGMENTS. THEREFORE, THE INTEREST IS TO BE CALCULATED ONLY FROM 1/6/2003 UP TO THE DATE OF REGULAR ASSESSMENT AND N OT FROM THE DATE OF REFUND ISSUED, IF THE REFUND WAS ISSUED PRIOR TO 1/ 6/2003. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF DECEMBER, 2012 SD/- SD/- (JASON P BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUD ICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.