GE CAPITAL SERVICES INDIA, MUMBAI V. ITO WD 19(3)(2), MUMBAI

ITA 1682/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8294 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 22-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRUNAL PARIKH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 1080/MUM/2016 ITA NOS. 1665 TO 1696/MUM/2016 (ASSESSMENT YEARS: 2007-08, 2009-10 & 2010-11) M/S. GE CAPITAL SERVICES INDIA VS. INCOME TAX OFFICER - 23(1)(2) 127 MAKER CHAMBERS III NARIMAN POINT MUMBAI 400021 MATRU MANDIR, GRAND ROAD MUMBAI 400007 PAN AAACG0239L APPELLANT RESPONDENT APPELLANT BY: SHRI J.D. MISTRI, SENIOR COUNSEL, MS. FERESHTE SETHNA & SHRI MRUNAL PARIKH RESPONDENT BY: SHRI P.C. CHHOTARAY, SR. STANIDNG C OUNSEL DATE OF HEARING: 29.11.2017 DATE OF PRONOUNCEMENT: 22.02.2017 O R D E R PER BENCH THESE 33 APPEALS BY GE CAPITAL SERVICES INDIA CAME TO BE FILED PURSUANT TO THE ORDERS OF THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF GE CAPITAL SERVICES INDIA VS. ITAT AND OTHERS IN WR IT PETITION (L) NO. 424 OF 2016 DATED 17.02.2016 IN CONNECTION WITH THE FOL LOWING CASES: - SR. NO. A.Y. NAME OF THE SCRUTIZATION TRUST ITA NO. 01 5742 / MUM / 2014 IGHCC 2 LOAN TRUST 2007 - 08 02 5741 / MUM / 2014 IGHCC LOAN TRUST 2007 - 08 03 5740 /MUM / 2014 IGHCC 3 LOAN TRUST 2007 - 08 04 5759/MUM/2014 IGPE LOAN TRUST 2007 - 08 05 5758/MUM/2014 IRE LOAN TRUST 2007 - 08 06 5737/ MUM/ 2014 KGE LOAN TRUST 2007 - 08 07 5761 / MUM/ 2014 KJS LOAN TRUST 2007 - 08 08 4785/MUM / 2013 IML LOAN TRUST 2009 - 10 09 4783 / MUM/ 2013 IWH LOAN TRUST 2009 - 10 10 1443 / MUM/ 2014 IBH LOAN TRUST 2009 - 10 11 4781 / MUM/ 2013 IEL LOAN TRUST 2009 - 10 12 4786 / MUM/ 2013 KBA LOAN TRUST 2009 - 10 13 3608 / MUM/ 2014 KUL LOAN TRUST 2009 - 10 ITA NO. 1080/MUM/2016 + 32 M/S. G.E. CAPITAL SERVICES INDIA 2 14 1444/MUM / 2014 KSE LOAN TRUST 2009 - 10 15 4092 / MUM/ 2014 PSE LOAN TRUST 2009 - 10 16 3624 / MUM/ 2014 PES LOAN TRUST 2009 - 10 17 4784 / MUM/ 2013 PFL LOAN TRUST 2009 - 10 18 4782/MUM/2013 KR LOAN TRUST 2009 - 10 19 4093 / MUM/ 2014 KAG LOAN TRUST 2009 - 10 20 3623 / MUM/ 2014 IBH LOAN TRUST 2010 - 11 21 3703 / MUM/ 2014 IEL LOAN TRUST 2010 - 11 22 3621/MUM / 2014 KBA LOAN TRUST 2010 - 11 23 3704 / MUM/ 2014 KSE LOAN TRUST 2010 - 11 24 5718 / MUM/ 2014 PSE LOAN TRUST 2010 - 11 25 5716 / MUM/ 2014 PES LOAN TRUST 2010 - 11 26 3771 / MUM/ 2014 IPL LOAN TRUST 2010 - 11 27 3773 / MUM/ 2014 KEC LOAN TRUST 2010 - 11 28 3772 / MUM/ 2014 IOP LOAN TRUST 2010 - 11 29 5715 / MUM/ 2014 ISH LOAN TRUST 2010 - 11 30 3622 / MUM/ 2014 IKR LOAN TRUST 2010 - 11 31 3956 / MUM/ 2014 KAG LOAN TRUST 2010 - 11 32 5720 / MUM/ 2014 PFL LOAN TRUST 2010 - 11 33 5513/MUM/2014 IRE LOAN TRUST 2007-08 2. THE RELEVANT PORTION OF THE HON'BLE HIGH COURTS ORDER (SUPRA) DIRECTING FILING OF THESE APPEALS AND CONDONATION O F DELAY READS AS UNDER: - 2. AT THE HEARING, THE PARTIES AGREED THAT THE ISSUE U NDER CHALLENGE IN THE PRESENT PETITION VIZ. WHETHER AN INTERVENTIO N APPLICATION CAN BE ENTERTAINED BY A REGULAR BENCH (NOT A SPECIAL BENCH ) OF THE TRIBUNAL MAY NOT BE ADJUDICATED UPON IN THIS PETITION AND BE LEFT OPEN TO BE CONSIDERED IN AN APPROPRIATE CASE. THIS FOR THE REA SON THAT THE PARTIES ARE IN BROAD AGREEMENT THAT THE ENTIRE PETITION COU LD BE DISPOSED OF IN THE FOLLOWING TERMS: - (I) THE RESPONDENT NOS. 2 AND 3 WILL SERVE ON THE P ETITIONER COPIES OF THE ORDERS PASSED BY THE ASSESSIN 5 G OFFICER AND THE 1 ST APPELLATE AUTHORITY IN THE CASE OF IRE LOAN TRUST F OR THE ASSESSMENT YEAR 2007-08 AND ALL UNREPORTED ORDERS A ND OTHER MATERIALS RELIED ON THEREIN WITHIN 7 (SEVEN) DAYS F ROM TODAY ON ITS ADVOCATES M/S. DUTT MENON DUNMORRSETT, 121 MAKER CH AMBERS IV NARIMAN POINT, MUMBAI-400 021. (II) THE PETITIONER SHALL BE AT LIBERTY TO REQUIRE THE RESPONDENT NOS. 2 AND 3 TO SERVE UPON THEM SIMILAR ORDERS AND MATERIALS IN RESPECT OF OTHER ASSESSMENTS IF SO ADVISED WITHIN 3 0 DAYS FROM TODAY ALONG WITH ADDRESS ON WHICH THE ORDERS ARE TO BE SERVED. (III) THE PETITIONER SHALL FILE AN APPEAL AGAINST ANY ORDER SERVED UPON IT UNDER PARA (I) HEREINABOVE, IF IT IS SO CHO OSES WITHIN 14 DAYS (FOURTEEN) DAYS OF SERVICE UPON IT UNDER PARA (I) HEREINABOVE. ITA NO. 1080/MUM/2016 + 32 M/S. G.E. CAPITAL SERVICES INDIA 3 (IV) THE PETITIONER SHALL BE AT LIBERTY TO FILE APP EALS AGAINST ORDERS REFERRED TO IN PARA (II) HEREINABOVE IF SO A DVISED. (V) THE 1 ST RESPONDENT SHALL FORTHWITH HEAR THE APPEALS FILED IN THE CASE OF IRE LOAN TRUST NOS. 5758/M/2014 AND 551 3/M/2014 ALONG WITH THE APPEAL IF ANY FILED BY THE PETITIONE R AS PER PARA (III) HEREIN ABOVE. 3. TAKING INTO ACCOUNT THE PECULIAR FACTS OF THIS CASE, AFTER HEARING THE PARTIES, WE GIVE FURTHER FOLLOWING DECISIONS: - (A) IN THE PECULIAR FACTS OF THE PRESENT CASE, PART ICULARLY TAKING INTO ACCOUNT THE FOLLOWING FACTS (I) THE PETITIONERS WERE NOT HEARD BEFORE THE ORDER DATED 3 0' H JUNE, 2014 WAS PASSED; (II) THE ORDER DATED 30 TH JUNE, 2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT YET BEEN OFFICIALLY COMMUNICA TED TO THE PETITIONER (ALTHOUGH ON BEING ASKED, ON INSTRUCTION S, MR. MISTRY STATES THEY CAME TO KNOW OF THE ORDER IN AUGUST, 2014); (III) A COPY OF THE ORDER IN THE CASE OF INDIAN CO RPORATE LOAN 'SECURITIZATION TRUST 2008 SERIES 14 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) RELIED UPON IN THE ORDER DATED 14 TH JUNE, 2014 HAS NOT BEEN FURNISHED TO THE PETITIONER; (ALTHOUGH ON BEING ASKED, MR. MISTRY STATES ON INSTRUCTIONS THAT THE PETITION ER GOT A COPY OF THE SAME SOMETIME IN NOVEMBER, 2015); AND (IV) MR. CHHOTARAY, THE LEARNED COUNSEL VERY FAIRLY IN THE INTEREST OF JUSTICE STATES THAT THE REVENUE DOES NOT DESIRE TO OPPOSE THE APPEAL ON THE GROUND OF DELAY. IN THE AFORESAID FACTS, THE DELAY, IF ANY, ON THE P ART OF THE PETITIONER IN FILING ITS APPEAL TO THE TRIBUNAL STANDS CONDONE D. THUS THE TRIBUNAL SHALL HEAR THE PETITIONER'S APPEAL ON MERITS, IF TH E APPEAL IS FILED IN TERMS OF PARA 2 (I) AND (III) HEREINABOVE. (B) THE TRIBUNAL WOULD CONTINUE WITH THE ONGOING HE ARING OF THE APPEALS BEFORE IT IN THE CASE OF INDIAN CORPORATE L OAN SECURITIZATION TRUST 2008 SERIES 14 BEING INCOME TAX APPEAL NO 398 6/MUM/2013 AND 4343/MUM/2013. WE ARE INFORMED THAT THERE ARE O THER 245 APPEALS LISTED ON THE BOARD OF THE TRIBUNAL ALONG W ITH THE AFORESAID TWO APPEALS. IT IS OPEN FOR THE TRIBUNAL TO DECIDE EITHER THE LEAD APPEAL WHICH THEY HAVE HEARING PRESENTLY OR ANY OF THE OTHER 245 APPEALS OR ALL THE 247 APPEALS AS IT DEEMS FIT. HOW EVER, BEFORE PASSING THE FINAL ORDER IN ANY ONE OF THE APPEALS W HICH ARE PRESENTLY LISTED ON THE TRIBUNAL'S BOARD, THE PETITIONER'S AP PEAL IF FILED AS PROVIDED IN PARA 2(I) AND (III) HEREINABOVE, WOULD BE HEARD ALONG WITH THE APPEAL OF ARE LOAN TRUST BEING APPEAL NO.5758/M UM/2014 AND 5513/MUM/2014 (ALREADY AMONGST THE 247 MATTERS LIST ED ON BOARD). THIS IS FOR THE REASON THAT THE ORDER DATED 30 TH JUNE, 2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ADVERSE TO THE PETITIONER HAS PLACED RELIANCE UPON ITS DECISION IN THE CASE O F INDIAN CORPORATE ITA NO. 1080/MUM/2016 + 32 M/S. G.E. CAPITAL SERVICES INDIA 4 LOAN SECURITIZATION TRUST 2008 SERIES 14. THUS, THE BASIS OF THE DECISION IN THE PENDING APPEAL IN INDIAN CORPORATE LOAN SECURITIZATION TRUST 2008 SERIES 14 IS THE SAME AS PASSED IN THE CASE OF THE PETITIONER. THEREFORE, BEFORE THE TRIBUNAL T AKES A VIEW ON THE INDIAN CORPORATE LOAN SECURITIZATION TRUST 2008 SER IES 14 OR ANY OF THE OTHER 245 PENDING APPEALS (IN CASE IT GIVES RIS E TO THE SAME ISSUE), IT IS NECESSARY TO HEAR THE PETITIONER'S SUBMISSION OTHERWISE IT MAY FACED WITH FAIT ACCOMPLI. RESPECTFULLY FOLLOWING THE ORDERS OF THE HON'BLE HI GH COURT THESE APPEALS ARE TAKEN UP FOR HEARING FOR WHICH THE DELAY IN FIL ING THEM HAS ALSO BEEN CONDONED. 3. THE GROUNDS OF APPEAL RAISED IN THE CASE OF GE CAPI TAL SERVICES INDIA (GECSI) FOR A.Y. 2007-08 IN ITA NO. 1080/MUM/2016 A RE AS UNDER: - 1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME -TAX (APPEALS) ['CIT(A)'] ER RED IN MECHANICALLY FOLLOWING THE DECISION OF THE CIT(A) I N THE CASE OF INDIAN CORPORATE LOAN SECURITIZATION TRUST 2008 SER IES 14 AND THEREBY HOLDING THAT AN ASSOCIATION OF PERSONS ('AO P') WAS FORMED BETWEEN IL&FS TRUST COMPANY ('IL&FS'), THE M UTUAL FUND INVESTORS/PASS THROUGH CERTIFICATE ('PTC') HOL DERS AND THE APPELLANT-ORIGINATOR OF LOAN ('GECSI'). 2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE THAT NO AOP WAS FORMED, SINCE THERE WAS NO COMMON PURPOSE OR ACTION BETWEEN GECSI, IL&F S AND THE PTC HOLDERS, AND INDEED, NO COMMON OR JOINT MAN AGEMENT; IN FACT, THE ROLES AND RESPONSIBILITIES OF ALL PARTIES OF THE ALLEGED AOP WERE DISTINCTLY AND SEPARATELY IDENTIFIABLE. 3) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE THAT GECSI HAD NO RIGHT S OR OBLIGATIONS INSOFAR AS THE MANAGEMENT OF THE IRE LO AN TRUST ('TRUST') AND/OR INTERESTS OF THE PTC HOLDERS AND, THEREFORE, GECSI COULD NOT BE HELD TO BE A PART OF ANY ALLEGED AOP. 4) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAVING HELD THAT THE ORIGINATOR (GECSI IN TH IS CASE) HAS ACTUALLY SOLD THE LOAN ALONG WITH INTEREST THEREIN, COULD NOT HAVE HELD GECSI AS PART OF THE ALLEGED AOP. 5) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSING OFFI CER ('AO'), IN THE CASE OF IRE LOAN TRUST, HAD RECORDED A CATEGORI CAL FINDING THAT ASSIGNMENT OF LOAN BY GECSI TO IL&FS WAS A DIF FERENT AND SEPARATE TRANSACTION, AND HAD NO RELATION WHATSOEVE R WITH THE SUBSEQUENT ISSUANCE OF PTCS AND, THEREFORE, THE ACT ION OF THE CIT(A) WAS IN DIRECT CONTRADICTION OF THE FINDINGS OF THE AO, FOR WHICH NO REASON WAS ASSIGNED BY THE CIT(A). ITA NO. 1080/MUM/2016 + 32 M/S. G.E. CAPITAL SERVICES INDIA 5 6) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) COULD NOT HAVE HELD GECSI AS PART OF THE ALL EGED AOP WITHOUT AFFORDING GECSI AN OPPORTUNITY OF BEING HEA RD, PARTICULARLY WHEN THE AO HAD RECORDED A CATEGORICAL FINDING THAT ASSIGNMENT OF LOAN BY GECSI TO IL&FS WAS A DIFFERENT AND SEPARATE TRANSACTION AND HAD NO RELATION WHATSOEVER WITH THE SUBSEQUENT ISSUANCE OF PTCS. 7) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE THAT ONCE HE CAME TO TH E CONCLUSION THAT THE CONSTITUENTS OF THE ALLEGED AOP WERE DIFFE RENT FROM THE CONSTITUENTS INCLUDED BY THE AO, HE OUGHT TO HAVE Q UASHED THE SAID ASSESSMENT. 8) WITHOUT PREJUDICE TO THE AFORESAID, THE CIT(A) F AILED TO APPRECIATE THAT NO INCOME COULD BE ATTRIBUTED TO GECSI, SINCE INCOME FROM SECURITIZATION/ ASSIGNMENT OF THE LOAN, WHICH WAS T HE ALLEGED ROLE OF GECSI IN THE AOP, HAS ALREADY BEEN BROUGHT TO TAX BY THE AO OF GECSI IN DELHI. 9) WITHOUT PREJUDICE TO THE AFORESAID, THE CIT(A) E RRED IN ENHANCING THE ASSESSMENT MADE BY THE AO WITHOUT APPRECIATING THAT INCOME BY WAY OF INTEREST BECOMES DUE AND PAYABLE U NDER THE RELEVANT CONTRACTUAL ARRANGEMENTS. 10. WITHOUT PREJUDICE TO THE AFORESAID, THE CIT(A) ERRED IN NOT ALLOWING DEDUCTION FOR INTEREST EXPENDITURE ON THE BASIS APPLIED BY HIM FOR CHARGING INTEREST RECEIPTS AS INCOME. SIMILAR GROUNDS HAVE BEEN RAISED IN THE OTHER 32 AP PEALS/CASES (SUPRA). 4. A PERUSAL OF THE GROUNDS RAISED BY THE GE CAPITAL S ERVICES INDIA, IN SUM AND SUBSTANCE, CHALLENGES THE ACTION OF THE LEA RNED CIT(A) AS BEING ERRONEOUS IN INCLUDING IT AS PART OF AN ASSOCIATION OF PERSONS (AOP) CONSISTING OF (I) IL & FS TRUST COMPANY LTD., (II) MUTUAL FUND INVESTORS/ PASS THROUGH CERTIFICATE (PTC) HOLDERS AND (III) GE CSI THE ORIGINATOR OF THE LOAN IN THE CASE OF IRE LOAN TRUST AND OTHER 32 CAS ES (SUPRA), BY FOLLOWING THE DECISION OF THE CIT(A) IN THE CASE OF INDIAN CO RPORATE LOAN SECURITIZATION TRUST 2008, SERIES 14 FOR A.Y. 2009- 10. 5. THIS BENCH OF THE TRIBUNAL WHILE DECIDING THE CROSS APPEALS IN THE LEAD MATTER, I.E. CASE OF INDIAN CORPORATE LOAN SEC URITIZATION TRUST 2008, SERIES 14 FOR A.Y. 2009-10 IN ITS ORDER IN ITA NOS. 2986 & 4343/MUM/ 2013 DATED 17.02.0217 (A COPY OF WHICH WILL FORM P ART OF THIS ORDER) HAS HELD, INTER ALIA, THAT THE ASSESSEE THEREIN IS A VA LID TRUST AND IS NOT TO BE ASSESSED AS AN AOP AS HELD BY THE AUTHORITIES BELOW . IN THIS REGARD, BOTH ITA NO. 1080/MUM/2016 + 32 M/S. G.E. CAPITAL SERVICES INDIA 6 PARTIES IN HEARINGS BEFORE US, AFTER VERIFICATION, AGREED THAT AS HELD BY THE LEARNED CIT(A)S, IDENTICAL ISSUES ARE RAISED IN THE OTHER 248 APPEALS; WHICH INCLUDES THE APPEALS OF IRE LOAN TRUST (ITA NO. 575 8/MUM/2014 AND ITA 5513/MUM/2014) AND OTHER 32 CASES LISTED ABOVE WHER E GECSI WAS ORIGINATOR IN THOSE LOAN SECURITIZATION TRANSACTI ONS. IN THAT VIEW OF THE MATTER, WE HAVE HELD IN THOSE 248 APPEALS IN THE CA SE OF IRE LOAN TRUST IN ORDER IN ITA NOS. 5513 & 5758/MUM/2014 AND OTHERS O F EVEN DATE THAT OUR FINDINGS RENDERED IN THE CASE OF INDIAN CORPORA TE LOAN SECURITIZATION TRUST 2008, SERIES 14 IN ITA NOS. 3986 & 4343/MUM/2 013 DATED 17.02.2017 WOULD APPLY MUTATIS MUTANDIS TO ALL THOS E APPEALS OF BOTH THE ASSESSEE AND REVENUE. 6. IN OUR ORDER IN THE CASE OF INDIAN CORPORATE LOAN S ECURITIZATION TRUST 2008, SERIES 14 IN ITA NOS. 3986/MUM/2013 FOR A.Y. 2009-10 DATED 17.02.2017 WE HAVE, INTER ALIA, HELD THAT THE ASSES SEE IS A VALID TRUST AND IS NOT AN AOP AS HELD BY THE AUTHORITIES BELOW. SIN CE WE HAVE HELD THAT THERE IS NO AOP, THEREFORE YES BANK, THE ORIGINAT OR AND OTHER INVESTORS IN THAT CASE ARE NOT A PART OF AN AOP AS WAS HELD BY T HE LEARNED CIT(A). IN THAT VIEW OF THE MATTER AND FOLLOWING THE DECISION OF THIS BENCH IN THE CASE OF INDIAN CORPORATE LOAN SECURITIZATION TRUST 2008 SERIES 14 FOR A.Y. 2009-10 (SUPRA), WHEREIN WE HAVE ALREADY HELD THAT THERE IS NO AOP IN EXISTENCE, THE GRIEVANCE OF THE ASSESSEE, GE CAPITA L SERVICES INDIA, THAT IT IS NOT A PART OF AN AOP AS HELD BY THE CONCERNED CI T(A) IN THE 33 CASES (LISTED SUPRA), STANDS ADDRESSED. THEREFORE, THE GR OUNDS RAISED IN THESE 33 APPEALS BY GE CAPITAL SERVICES INDIA ARE RENDERED I NFRUCTUOUS AND ARE ACCORDINGLY DISMISSED. 7. IN THE RESULT, THESE 33 APPEALS BY THE ASSESSEE, GE CAPITAL SERVICES INDIA LISTED ABOVE FOR VARIOUS ASSESSMENT YEARS, AR E DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2017. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22 ND FEBRUARY, 2017 ITA NO. 1080/MUM/2016 + 32 M/S. G.E. CAPITAL SERVICES INDIA 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -30, MUMBAI 4. THE CIT - 19, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.