SUPERPLAZA MERCANTILE COMPANY P.LTD ( NOW MERGED WITH TOPSTAR MERCANTILE P. LTD), MUMBAI V. ASST CIT CIR 7(2), MUMBAI

ITA 2100/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92373 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Business expenditure; Question of law
• Section: 143(3); 244A; 234B

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./ I.T.A. NO.2100 /MUM/2012 ( / ASSESSMENT YEAR : 2008-2009 SUPERPLAZA MERCANTILE COMPANY PVT. LTD., (NOW MERGED WITH TOPSTAR MERCANTILE PRIVATE LTD.,) PENINSULA SPENTA, 2 ND FLOOR, MATHURADAS MILLS COMPOUND, SENAPATI BAPART MARG, LOWER PAREL, MUMBAI -400 013. / VS. ASSTT. COMMISSIONER OF INCOME TAX RANGE 7(2), MUMBAI. ./ PAN : AAICS7177H ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI RONAK G. DOSHI R E SPONDENT BY : S MT. N.V. NADKARNI / DATE OF HEARING : 27-04-2015 / DATE OF PRONOUNCEMENT :27-04-2015 [ !' / O R D E R PER G.S. PANNU, A.M . : THIS IS AN APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) -13, MUMBAI DATED 4-11-201 1 FOR THE A.Y. 2008-09 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 DATED 23-12-2010. ITA 2100/M/12 2 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS)-13, MUMBAI ('T HE CIT (A)') ERRED IN UPHOLDING THE ACTION OF THE INCOME-TAX OFFICER 7 (2), MUMBAI ('THE A.D.') IN CHARGING THE GROSS AMOUNT OF INTEREST TO TAX AMOUNTING TO RS.L,28,13,328/- (1,00,25,557/- + 27,87,771/-), AS AGAINST NET INTEREST OF RS. 1,00,25,557/- RETURNED BY THE APPELLANT. 2. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT: I. THE APPELLANT HAD RECEIVED NET INTEREST AMOUNTIN G TO 1,00,25,557/- WHICH PERTAINED TO URVI CHEMICALS AND ALLIED INDUSTRIES LTD. ('UCAIL') FOR A.Y. 1993-94, WHICH G OT MERGED WITH THE APPELLANT AS PER THE SCHEME OF MERGER APPR OVED BY HIGH COURT W.E.F. APRIL 01, 2005; II. THE NET INTEREST RECEIVED WAS, INTEREST INCOME ON REFUND U/S. 244A AFTER DEDUCTING INTEREST PAID U/S. 220(2) AND U/S: 2348; 3. THE APPELLANT, THEREFORE, PRAYS THAT ONLY NET IN TEREST SHOULD BE CHARGED TO TAX AMOUNTING TO RS. 1,00,25,557/-. 3. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASSESS EE IS THAT INCOME TAX AUTHORITIES HAVE ERRED IN INCLUDING A SUM OF RS. 1, 28,13,328/- REPRESENTING INTEREST RECEIVED ON REFUND OF TAXES U/S 244A OF TH E INCOME TAX ACT, 1961 IN TAXABLE INCOME AS AGAINST AN AMOUNT OF RS. 1,00,25, 557/- OFFERED BY THE ASSESSEE WHICH WAS AFTER NETTING OF THE INTEREST PA ID TO THE DEPARTMENT U/S 220(2) AND 234B OF THE ACT OF RS. 27,87,771/-. 4. IN THIS CONTEXT, BRIEF FACTS ARE THAT THE ASESSE E RECEIVED INTEREST ON REFUND OF TAXES PAID AMOUNTING TO RS. 1,28,13,328/- . THE ASSESSEE ALSO PAID INTEREST ON TAXES PAYABLE IN TERMS OF SECTIONS 220( 2) AND 234B OF THE ACT AMOUNTING TO RS. 27,87,771/-. THE ASSESSEE SET-OFF THE INTEREST PAID AGAINST THE INTEREST RECEIVED AND OFFERED TO TAX ONLY NET I NTEREST INCOME OF RS. 1,00,25,557/-. THE A.O. DISAGREED WITH THE ASSESSEE AND DENIED THE ASSESSEES CLAIM FOR SET-OFF OF INTEREST U/SS 220(2 ) AND 234B OF THE ACT AGAINST ITA 2100/M/12 3 INTEREST INCOME RECEIVED ON REFUND OF TAXES U/S 244 A OF THE ACT. THE LD. CIT(A) ALSO AFFIRMED THE STAND OF THE A.O. AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING THE LD. REPRESENTATIVE OF THE ASSESSEE RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BANK OF AMERICA NT & SA, [2011] 13 TAXMANN.COM 103 (MUMBAI) WHEREIN THE CLAIM OF THE ASSESSEE FOR NETTING OF INTEREST WAS A LLOWED. THE LD. REPRESENTATIVE OF THE ASSESSEE CLAIMED THAT IN THE CASE OF BANK OF AMERICA NT & SA (SUPRA), THE TRIBUNAL HAS FOLLOWED THE EARLIER DECISION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF CYANAMIDI INDIA VS. ITO (ITA NO. 4561/BOM/91-92 DTD. 23-5-1984. THE LD. REPRESENTATI VE OF THE ASSESSEE FURTHER POINTED OUT THAT THE DECISION OF THE TRIBUN AL IN THE CASE OF BANK OF AMERICA NT & SA (SUPRA) HAS SINCE BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF THE DIRECTOR OF INCOME TA X (INTERNATIONAL TAXATION) VS. BANK OF AMERICA NT AND SA VIDE INCOME TAX APPEA L NO. 177 OF 2012 DATED 3 RD JULY, 2014. COPIES OF THE AFORESAID DECISIONS HAVE ALSO BEEN PLACED ON RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE ALSO FURNISHED THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK VS. ACIT (INTERNATIONAL TAXATIO N) IN ITA NO. 724/MUM/2011 ORDER DATED 10-12-2014 WHEREIN ALSO TH E AFORESAID PROPOSITION HAS BEEN UPHELD. 6. ON THE CONTRARY, THE LD. D.R. HAS RELIED UPON TH E ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT INTEREST PAID BY THE ASSES SEE UNDER SECTIONS 220(2) AND 234B OF THE ACT ARE IN THE NATURE OF INCOME TA X AND AS PER THE PROVISIONS OF THE ACT, INCOME TAX IS NOT AN ALLOW ABLE DEDUCTION AND THEREFORE THE ASSESSEES CLAIM FOR SET-OFF OF INTEREST PAID U NDER SECTIONS 220 (2) AND 234B AGAINST INTEREST INCOME ON REFUND OF TAXES U/S 244A WAS RIGHTLY DENIED. ITA 2100/M/12 4 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS PRECEDENTS CITED BY BEFORE US, WE NOTE THAT IDENTICAL CONTROVERSY CAME UP BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BANK OF AMERICA NT & SA (SUPRA), CAME UP WHEREIN THE FOLLOWING DISCUSSION HAS BEEN MADE:- 3. EVEN WITH REGARD TO THE QUESTION NO.2 WE DO NOT FIND THAT IT IS A SUBSTANTIAL QUESTION OF LAW. THE TRIBUNAL FOUND THA T THE ASSESSEE BANK RECEIVED INTEREST ON REFUND OF TAXES PAID. . IT ALSO PAID IN TEREST ON THE TAXES WHICH WERE PAYABLE. THE ASSESEE SOUGHT TO SET OFF THE INTERES T PAID AGAINST THE INTEREST RECEIVED AND OFFERED THE NET INTEREST RECEIVED TO T AX. WE DO NOT SEE THAT SUCH FINDINGS OF THE TRIBUNAL VITIATED IN LAW. ALL THAT THE TRIBUNAL HAS DONE EARLIER AND NOW IS THAT IN THE CASE OF THIS ASSESSEE SIMPLY BECAUSE THE EXERCISE CARRIED OUT BY IT DOES NOT RESULT IN LOSS OF REVENUE AND TH ERE COULD NOT BE ANY PROHIBITION FOR THE SAME, ALLOWED IT. THAT IS HOW T HE ASSESSING OFFICER'S ORDER IS SET ASIDE. WE DO NOT SEE HOW ANY LARGER CONTROVERSY OR QUESTION ARISES FOR OUR CONSIDERATION. MR. PINTO WOULD REFER TO SECTION 57 OF THE INCOME TAX ACT, 1961 IN THAT REGARD AND SUBMIT THAT THIS COURSE WOULD BE AD OPTED BY OTHER ASSESSEES AS WELL AND IN THAT EVENT THE ORDER PASSED BY THIS COURT WOULD COME IN THE WAY OF THE REVENUE IN INVESTIGATING AND PROBING SUCH EX ERCISE BY OTHER ASSESSEES. 4. WE DO NOT SEE HOW THIS ORDER CAN BE CITED AS PRE CEDENT INASMUCH AS THE ASSESSEE BEFORE THE TRIBUNAL AND BEFORE US PAID INT EREST TO THE INCOME TAX DEPARTMENT AMOUNTING TO RS.10,26,906/-. THE ASSESSE E CLAIMED THAT THIS WAS BUSINESS EXPENDITURE AND THIS SHOULD HAVE BEEN ALLO WED. THE ASSESSEE HAS RECEIVED THE INTEREST OF RS.1,07,57,930/-. IT WAS S UBMITTED THAT THE AMOUNT OF INTEREST PAID BY THE ASSESSEE SHOULD HAVE BEEN ALLO WED TO BE SET OFF AGAINST THE INTEREST DEPOSITED WITH THE DEPARTMENT AND TAXED IN THE HANDS OF THE ASSESSEE. THE ARGUMENT WAS THAT THE INTEREST PAID TO AND RECE IVED FROM IS THE SAME PARTY I.E GOVERNMENT OF INDIA AND THEREFORE, BOTH TRANSAC TIONS SHOULD BE TAKEN TOGETHER. 5. WE DO NOT FIND THAT THE TRIBUNAL HAS, IN PERMITT ING THIS EXERCISE, IN ANY WAY VIOLATED ANY OF THE PROVISIONS OF THE INCOME TA X ACT, 1961. IT WAS A PECULIAR SITUATION BETWEEN THE ASSESSEE AND THE DEP ARTMENT. THE TRIBUNAL HAS FOLLOWED THE SIMILAR EXERCISE IN THE CASE OF VERY A SSESSEE ON THE PRIOR OCCASION AS WELL. IN SUCH CIRCUMSTANCES WE ARE OF THE OPINIO N THAT THE SECOND QUESTION ALSO DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW . 8. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE D ECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY THE GROUND RAIS ED BY THE ASSESSEE IS ALLOWED. ITA 2100/M/12 5 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT T HE CONCLUSION OF THE HEARING ON 27-04-2015. SD/- SD/- (AMIT SHUKLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER . / MUMBAI ; 0! DATED 27-04-2015 .8../ RK RKRK RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 9 () / THE CIT(A), 13, MUMBAI 4. 9 / CIT, - 7,MUMBAI 5. <=> 88?@ , ?@ , . / / DR, ITAT, MUMBAI E BENCH 6. >BC D / GUARD FILE. ' / BY ORDER, < 8 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , . / / ITAT, MUMBAI