DEUTSCHE BANK A.G., MUMBAI V. THE DY. DIT (I.T.), RANGE 1(2), MUMBAI

ITA 3791/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3808 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-04-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 11-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: P J PARDIWALA
• Keywords: Cost of acquisition; Revenue expenditure
• Section: 143(3); 244A; 154; 15

Judgement Text

ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO.3791/MUM/2010 (ASSESSMENT YEAR: 2000-01) DEUTSCHE BANK A.G, FLOOR 3 NIRLON KNOWLEDGE PARK, BLOCK 1, WESTERN EXPRESS HIGHWAY, GOREGAON EAST, MUMBAI 400063 PAN: AAACD 1390 F VS. DY. DIRECTOR INCOME TAX (INTL. TAXATION)-1(2), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400038 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P.J. PARDIWALA AND SHRI NISHANT THAKKAR DEPARTMENT BY: SHRI PRAVIN VARMA AND SHRI MOHIT JAIN, DR DATE OF HEARING: 03/04/2013 DATE OF PRONOUNCEMENT: 10/04/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDERS O F THE CIT (A)10 MUMBAI DATED 15.03.2010. ASSESSEE HAS RAISED THE FOLLOWING THREE GROUNDS: 1. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF TH E DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-1(2 ) (AO) IN PASSING AN ORDER UNDER SECTION 154 OF THE INCOME TA X ACT AND INVOKING THE PROVISIONS OF SECTION 154 OF THE A CT. 2.A. THE CIT (A) ERRED IN UPHOLDING THAT ACTION OF AO OF STATIG THAT THE BROKEN PERIOD INTEREST (BPI) OF ` .16,48,83,258 PERTAINING TO SECURITIES PURCHASED PR IOR TO THE PREVIOUS YEAR RELEVANT TO THE AY 2000-01 AND SO LD DURING THE PREVIOUS YEAR RELEVANT TO THE AY 2000-01 HAD NOT BEEN WITHDRAWN IN THE ORDER DATED 31 ST JANUARY, 2006 ON GIVING EFFECT TO CIT (A)S ORDER DATED 16 TH JULY, 2004 WITHOUT APPRECIATING THAT THE ISSUE DID NOT AR ISE OUT OF THE SAID CIT (A)S ORDER. B. THE CIT (A) ERRED IN CONFIRMING THE ACTION OF AO IN WITHDRAWING BPI OF ` .16,48,83,258 ON SECURITIES ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 2 OF 12 PURCHASED PRIOR TO PREVIOUS YEAR RELEVANT TO AY 200 0-01 AND SOLD IN THE PREVIOUS YEAR RELEVANT TO AY 2000-0 1 WHEN THE ALLOWANCE WAS ON THE BASIS OF THE STAND OF THE DEPARTMENT IN THIS REGARD. C. THE CIT (A) OUGHT TO HAVE DIRECTED AO TO ALLOW B PI OF ` .16,48,83,258 WHICH PERTAINED TO SECURITIES PURCHAS ED IN THE PREVIOUS YEARS RELEVANT TO THE FOLLOWING AY WHEN THE BPI PAID ON THE PURCHASE OF SECURITIES WAS DISALLOWED BY THE APPELLANTS AND CLAIMED AS A DEDUC TION IN THE YEARS IN WHICH SUCH SECURITIES WERE SOLD, IN ACCORDANCE WITH THE DEPARTMENTS STAND IN THE MATTE R. AY AMOUNT OF BPI ( ` .) 1993-94 1,72,603 1997-98 7,65,375 1998-99 2,69,83,521 1999-00 13,69,61,759 16,48,83,258 ========== 3. THE CIT (A) OUGHT TO HAVE HELD THAT THE APPELLA NTS HAD SUFFERED LOSS OF REVENUE ON ACCOUNT OF INTEREST UND ER SECTION 244A ON THE REFUND THAT WAS RIGHTLY DUE AS WELL AS POTENTIAL INCOME IT WOULD HAVE EARNED ON INTERES T IF IT WOULD HAVE RECEIVED IT ON TIME. 2. GROUND NO.1 IS GENERAL IN NATURE, HENCE DOES NOT RE QUIRE ANY ADJUDICATION. 3. BRIEFLY STATED, ASSESSEE IS A FOREIGN BANK AND THE ASSESSMENT UNDER SECTION 143(3) WAS ORIGINALLY COMPLETED ON 27 .03.2003 AT AN INCOME OF ` .280,93,33,010. THERE ARE CERTAIN ISSUES WHICH ARE AGITATED IN THE ASSESSMENT AND THE LEARNED CIT (A) VIDE HIS ORDER DATED 16.07.2004 GAVE SOME RELIEF. CONSEQUENTLY A C ONSEQUENTIAL ORDER WAS PASSED ON 31.01.2006 GIVING EFFECT TO ORD ERS U/S 143(3)/143(3) RWS 147. AO ON GOING THROUGH THE RECO RDS, NOTICED THAT WHILE GIVING EFFECT TO THE CIT (A) ORDER THE D EDUCTION ALREADY ALLOWED TO ASSESSEE IN ORIGINAL ASSESSMENT ORDER AM OUNTING TO ` 16,48,83,258 TOWARDS BROKEN PERIOD INTEREST (BPI) W AS NOT WITHDRAWN AND ACCORDINGLY A NOTICE UNDER SECTION 15 4 DATED 10.01.2008 WAS ISSUED. ASSESSEE OBJECTED TO THE SAM E STATING THAT THE AMUONTS CLAIMED AND ALLOWED WERE ACTUALLY NOT A LLOWED IN THE RESPECTIVE YEARS, THEREFORE, QUESTION OF WITHDRAWAL DOES NOT ARISE. ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 3 OF 12 AO DID NOT AGREE AND MADE THE ADJUSTMENT OF THE ABO VE SUM UNDER SECTION 154. THE MATTER WAS CARRIED TO THE CIT (A) AND IT WAS EXPLAINED THAT THE DETAILED EXPLANATION VIDE LETTER DATED 23.01.2008 WAS PROVIDED TO AO WHICH WAS NOT CONSIDERED. IT WAS SUBMITTED THAT THE BROKEN PERIOD INTEREST OF ` 16,48,83,258 ON SECURITIES SOLD IN THE PREVIOUS YEAR RELEVANT TO THE AY 2000-01 HAD BEEN PURCHSED IN THE PREVIOUS YEARS RELEVANT TO THE FOLLOWING AYS . AY AMOUNT OF BPI ( ` .) 1993-94 1,72,603 1997-98 7,65,375 1998-99 2,69,83,521 1999-00 13,69,61,759 16,48,83,258 ============ 3.1 IT WAS SUBMITTED THAT ASSESSEE HAS CLAIMED THE SAME IN THE RETURN OF INCOME AS PART OF THE SALE CONSIDERATION, AS IN THE RELEVANT YEARS ASSESSEE HAS NOT CLAIMED THE BROKEN PERIOD IN TEREST AS DEDUCTION AND SO THE SAME WERE CLAIMED AS PART OF C OST OF ACQUISITION AND AO ORIGINALLY HAS EXAMINED AND ALLO WED THESE AMOUNTS. IT WAS FURTHER SUBMITTED THAT THIS AMOUNT OF ` .16,48,83,258 HAS BEEN CLAIMED IN THE RETURN OF INC OME AND THE CLAIM WAS ACCEPTED BY AO IN HIS ORDER DATED 27 TH MARCH, 2003 UNDER SECTION 143(3) WHICH WAS IN ACCORDANCE WITH T HE DEPARTMENTS STAND IN THE MATTER AND THESE AMOUNTS HAD NOT BEEN ALLOWED IN THE AFORESAID AYS WHEN THE SECURITIES WE RE PURCHASED. 3.2 IT WAS FURTHER SUBMITTED THAT UPTO THE AY 1999- 00 IN ACCORDANCE WITH THE DEPARTMENTS STAND, BPI PAID AT THE TIME OF PURCHASE OF SECURITIES WAS ADDED BACK AND CLAIMED A S A DEDUCTION IN THE YEARS IN WHICH SUCH SECURITIES WERE SOLD. TH IS BEING AN ACCEPTED POSITION, THE MATTER WAS NOT IN DISPUTE OR AGITATED IN APPEAL. THEREFORE, ` .16,48,83,258 PERTAINING TO SECURITIES PURCHASED PRIOR TO PREVIOUS YEAR RELEVANT TO AY 200 0-01 HAS BEEN DISALOWED IN THE RESEPCTIVE YEARS OF PURCHASE AND C LAIMED IN PREVIOUS YEAR RELEVANT TO AY 2000-01 BEING THE YEAR OF SALE. ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 4 OF 12 3.3 THE LEARNED CIT (A) DISMISSED THE CONTENTIONS B Y STATING AS UNDER: 3.2 I HAVE CONSIDERED THE FACTS AND PERUSED THEMAT ERIAL ON RECORD. I FIND THAT THE CLAIM OF BROKEN PERIOD O F INTEREST WAS ALLOWED BY THE CIT (A) IN THE APPELLANT IS OWN CASE FOR THIS YEAR VIDE APPEAL ORDER NO.CIT (A)(XXXI/JTD IT- 3/IT-97/03-04/04-05 DATED 16.7.2004 HOLDING THAT BROKEN PERIOD INTEREST OF ` .30,36,72,909 PAID ON SECURITIES PURCHASES DURING THE YEAR IS ALLOWABLE IN THE YEAR OF PURCHASE. ACCORDINGLY THE DISALLOWANCE MAE BY AO WA S ALLOWED AS DEDUCTION. THIS DECISION WAS GIVEN AFTER OCNSIDERING TE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE A 1 OWN CASE FOR AY 1988-89 AND ALSO IN THE CASE OF CITI BANK 264 ITR 18 (BOM.), AO HOWEVER, IN THE ORD ER GIVING APPEAL EFFECT TO CIT (A) HAS ALLOWED DEDUCTI ON OF ` .30,36,72,909 BUT THE AMOUNT OF BROKEN PERIOD INTER EST OF ` .16,48,83,258 WAS REMAINED TO BE WITHDRAWN WHICH WS REQUIRED TO BE WITHDRAWN AS SAME WERE FOLLOWED ON T HE BASIS OF YEAR OF SALE OF SECURITIES. THIS RESULTED IN DOUBLE ALLOWANCE OF DEDUCTION ON ACCOUNT OF BROKEN PERIOD OF INTEREST. IT IS NOW WELL SETTLED THAT BROKEN PERIOD INTEREST IS ALLOWABLE ON THE BASIS OF YEAR OF PURCHASE OF SE CURITIES. SINCE THIS BEING A MISTAKE APPARENT FROM RECORD RES ULTING IN DOUBLE DEDUCTION, WHICH CAN BE RECTIFIED UNDER S ECTION 154 OF THE ACT.ACCORDINGLY THIS GROUND OF APPEAL IS TREATED AS DISMISSED. 4. THE LEARNED COUNSEL REFERRING TO THE COMPUTATION OF INCOME FILED, ORDER OF THE CIT (A), STAND OF ASSESSEE AND THE DEPARTMENT WITH REFERENCE TO THE BROKEN PERIOD INTEREST IN EAR LIER YEARS SUBMITTED THAT INITIALLY BROKEN PERIOD INTEREST INV OLVED AT THE TIME OF PURCHASING OF SECURITIES WAS CLAIMED AS REVENUE DEDUCTION WHICH MATTER WAS CONTESTED. CONSEQUENT TO THE DEPARTMENTA L STAND THAT THIS BECOMES PART OF PURCHASE COST OF SECURITIES, A SSESSEE DID NOT CLAIM THE AMOUNTS IN THE ABOVE YEARS, WITH REFERENC E TO THE PURCHASE OF SECURITIES SOLD DURING THIS YEAR. HOWEV ER, SUBSEQUENTLY THE ISSUE WENT IN FAVOUR OF ASSESSEE AND THEREFORE, ASSESSEE STARTED CLAIMING AGAIN THE BROKEN PERIOD INTEREST AS A DEDU CTION IN THE YEAR OF PURCHASE. THEREFORE, ASSESSEE HAS LEFT THE FOLLO WING NOTE WHILE FILING THE RETURN OF INCOME: 2. FOLLOWING THE SUPREME COURTS DECISION IN THE C ASE OF VIJAYA BANK LTD 9187 ITR 541) THE INTEREST PAID IN ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 5 OF 12 RESPECT OF SECURITIES PURCHASED DURING THE YEAR END ED 31 ST MARCH, 2000 AMOUNTING TO ` .30,36,72,909 HAS BEEN ADDED BACK IN THE COMPUTATION CONSIDERING SUCH INTE REST AS PART OF THE PURCHASE COST OF THE SECURITIES. SUC H INTEREST SHOULD BE ALLOWED AS A DEDUCTION IN THE YE AR IN WHICH SUCH SECURITIES ARE SOLD. BROKEN PERIOD INTEREST PAID OF ` .16,48,83,258 DISALLOWED IN THE PRIOR YEARS IN RESPECT OF THE SECURITIES WHI CH WERE SOLD DURING THE PREVIOUS YEAR ENDED 31 ST MARCH, 2000 HAS BEEN CLAIMED AS A DEDUCTION. 4.1 REFERRING TO THE ABOVE AND VARIOUS ORDERS ON T HE ISSUE, IT WAS SUBMITTED THAT THE AMOUNT OF ` .30,36,72,909 WAS CONTESTED BEFORE THE CIT (A) WHO ALLOWED THE AMOUNTS AS A DEDUCTION. THE CLAIM OF THE ABOVE AMOUNT IS WITH REFERENCE TO THE INTEREST PAID IN RESPECT OF SECURITIES PURCHASED DURING THE YEAR ENDING AS ON 3 1 ST MARCH, 2000 WHICH IS ENTIRELY DIFFERENT FROM THE CLAIM OF ` .16,48,83,258 ON WHICH THE CLAIM WAS NOT MADE IN EARLIER YEARS AS ST ATED ABOVE. SINCE THOSE SECURITIES ON WHICH BPI WAS NOT CLAIMED IN THE INTERIM YEARS WERE SOLD, THESE AMOUNTS OF BPI BECOMES PART OF COST OF ACQUISITION OF THE SECURITIES SOLD DURING THE YEAR AND ACCORDINGLY, AO HAS EXAMINED AND ALLOWED THE AMOUNT ORIGINALLY, THEREFORE THE RECTIFICATION PROCEEDINGS ARE NOT CORRECT. 4.2 ON CLARIFICATION ABOUT THE AMOUNT MENTIONED BY AO UNDER SECTION 154 ORDER THAT THE RECONCILIATION WAS MADE ONLY TO THE EXTENT OF ` .2,76,06,599, THE LEARNED COUNSEL REFERRED TO THE STATEMENTS SUBMITTED TO AO VIDE LETTER DATED 23.01. 2008 AND REFERRED TO THE COLUMN PERTAINS TO AY 2000-01, 2001 -02. HE SUBMITTED THAT THE AMOUNTS PERTAINING TO AY 2000-01 ARE CORRECTLY STATED AT ` .16,48,83,258 WHEREAS AO HAS TAKEN THE AMOUNTS FROM AY 2001-02 COLUMN WHICH ARE AS UNDER: 1996-97 - ` .1,17,84,459 1997-98 - ` . 17,46,875 1998-99 - ` . 24,38,333 1999-00 - ` .1,16,36,932 TOTAL - ` .2,76,06,599 =========== ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 6 OF 12 4.3 IT WAS HIS SUBMISSION THAT EVEN THOUGH ASSESSEE HAS GIVEN COMPLETE CHART FROM AY 1990-91 TO AY 2004-05, RECON CILING VARIOUS AMOUNTS CLAIMED AND NOT CLAIMED, ALLOWED AND NOT AL LOWED, AO WRONGLY TAKEN THE AMOUNT PERTAINING TO THE LATER YE AR AND ACCORDINGLY, HE STATED THAT THE AMOUNTS ARE NOT REC ONCILIABLE. HE THEN REFERRED TO THE ORDER OF THE CIT (A) ALSO WHIC H WAS ALSO ON MISCONCEPTION ABOUT THE DOUBLE DISALLOWANCE MENTION ED THEREIN. 4.4 THE LEARNED DR HOWEVER, RELIED ON THE ORDERS OF THE CIT (A) AND AO. 4.5 WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE D ETAILS PLACED ON RECORD. THERE IS NO DOUBLE CLAIM AND THER E IS NO NECESSITY FOR ANY MODIFICATION UNDER SECTION 154 ON THE FACTS OF THE CASE. BOTH AO AND THE CIT (A) HAS MISUNDERSTOOD THE AMOUN TS AND THE CLAIMS AS CAN BE SEEN FROM THE DETAILS PLACED ON RE CORD AND THE EXPLANATION GIVEN BY ASSESSEE BEFORE THE AUTHORITIE S. THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT ASSESSEE HA S NOT CLAIMED THE ABOVE BROKEN PERIOD INTEREST IN THE RESPECTIVE AYS AS IN THOSE YEARS CONSEQUENT TO THE DEPARTMENTAL STAND, ASSESSEE DID NOT MAKE ANY CLAIM AS REVENUE EXPENDITURE AND THESE AMOUNTS WERE NOT ALLOWED AS DEDUCTION. THEREFORE, THEY BECOME COST OF ACQUIS ITION OF THE SECURITIES PURCHASED DURING THAT YEAR. AS CAN BE SE EN FROM THE NOTE LEFT IN THE COMPUTATION OF INCOME EXTRACTED ABOVE A LSO, ASSESSEE ALSO DID NOT CLAIM ORIGINALLY THE AMOUNTS OF ` .30,36,72,909 PERTAINING TO THE SECURITIES PURCHASED DURING THE Y EAR. HOWEVER, IN APPELLATE PROCEEDINGS, CONSEQUENT TO THE DECISION O F THE HON'BLE BOMBAY HIGH COURT ON THE ISSUE, THESE AMOUNTS WERE CLAIMED AND ALLOWED. THE AMOUNT OF ` .30,36,72,909 WAS WITH REFERENCE TO THE SECURITIES PURCHASED DURING THE YEAR WHICH WAS ORIG INALLY NOT CLAIMED AS DEDUCTION IN THE YEAR, BUT SUBSEQUENTLY THEY ARE ALLOWED AS REVENUE EXPENDITURE. THE AMOUNT OF ` 16,48,83,258 WAS BPI NOT CLAIMED AND ALSO NOT ALLOWED IN RESPECTIVE YEARS AT THE TIME OF PURCHASE. THESE AMOUNTS COULD HAVE BEEN ALLOWED AS A REVENUE EXPENDITURE IN THE RESEPCTIVE AYS HAD THERE BEEN AN Y CLAIM AS ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 7 OF 12 REVENUE EXPENDITURE. THUS THE BPI NOT CLAIMED OR AL LOWED BECOMES COST OF ACQUISITION OF THOSE SECURITIES WHEN SOLD. THEREFORE, ON EXAMINING THE RECORD AND THE STATEMENTS FILED BEFOR E AO WHILE EXPLAINING THE POSITION YEARWISE, WE ARE OF THE OPI NION THAT THESE AMOUNTS WERE NOT ALLOWED AS DEDUCTION IN THE YEAR O F PURCHASE, THEREFORE, THEY ARE BECOME PART OF THE COST OF ACQU ISITION OF THE SECURITIES SOLD DURING THE YEAR. IT WAS RIGHTLY ALL OWED BY AO ORIGINALLY IN THE YEAR UNDER SECTION 143(3). THERE IS NO NEED TO WITHDRAW THE ABOVE AMOUNT AND ACCORDINGLY THE CONTE NTIONS OF ASSESSEE ARE ALLOWED. GROUND NO.2 IS ALLOWED. 5. GROUND NO.3 PERTAINS TO THE CLAIM OF INTEREST UNDER SECTION 244A ON THE REFUND THAT WAS WITHHELD BY AO. ASSESSE E SUBMITTED THAT DUE TO WITHHOLDING OF REFUND AND NON GRANTING OF TIMELY INTEREST ON THE REFUNDS, THEY HAVE SUFFERED THE LOS S OF INTEREST/ POTENTIAL INCOME THAT THEY WOULD HAVE EARNED ON THE FUNDS THAT WERE NOT MADE AVAILABLE ON TIME. A REFUND OF ` .20,87,41,336 (INCLUDING INTEREST UNDER SECTION 244A OF ` .10,38,61,015) DETERMINED VIDE ORDER UNDER SECTION 154 BECAME DUE TO ASSESSEE ON 30 TH JUNE, 2008 BUT WAS GRANTED/ADJUSTED ON 28 TH AUGUST, 2008. IF THESE FUNDS WERE AT ASSESSEES DISPOSAL ON 30 TH JUNE, 2008, THEY WOULD HAVE EARNED INCOME ON ` .20,87,41,336 PLUS INTEREST FROM THAT DATE TILL 28 TH AUGUST, 2008 (BEING DATE OF GRANT OF REFUND CHEQUE OF ` .8,08,37,519 (AFTER ADJUSTING ` .11,75,17,715 AGAINST THE DEMAND FOR THE AY 2004-05 AND DEDUCTING TAX AT SOUR CE OF ` .1,03,86,102). 5.1 BEFORE THE CIT (A), THEASSESSEE RELIED IN THE C ASE OF SANDVIK ASIA LTD VS. CIT (280 ITR 643 (SC) WHEREIN THE HON' BLE SUPREME COURT HELD THAT IT IS THE LIABILITY OF THE GOVERNME NT ON THE GENERAL PRINCIPLES TO PAY INTEREST ON SUM WRONGFULLY RETAIN ED INCLUDING LIABILITY TO PAY INTEREST ON INTEREST WRONGFULLY RE TAINED. THE ASSESSEE FURTHER RELIED IN THE CASE OF NOVARITIS INDIA LTD ( AY 1996-77) IN ITA NO.1992/M/04 DATED 11.5.2006, SANDOZ P LTD (ITA NO. 1994- ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 8 OF 12 95/M/05) AND GRASIM INDUSTRIES LTD (ITA NO.3435-36/ M/05) IN SUPPORTS OF ITS CONTENTION. FURTHER ASSESSEE SUBMIT TED THAT IT HAS SUFFERED LOSS OF REVENUE ON ACCOUNT OF INTEREST UND ER SECTION 244A ON REFUND THAT WAS RIGHTLY DUE AS WELL AS POTENTIAL INCOME IT WOULD HAVE EARNED ON INTEREST IF IT WAS RECEIVED ON TIME . 5.2 THE LEARNED CIT (A) HOWEVER, DID NOT ALLOW THE CLAIM BY STATING AS UNDER: 7.5 I FIND THAT THE PROVISIONS OF SECTION 244A PROVIDE THAT THE INTEREST IS TO BE GRANTED STARTING FROM 1 ST APRIL OF THE ASSESSMENT YEAR UP TO THE DATE OF REFUND IS GRANTED. THERE ARE NO SPECIFIC PROVISIONS UNDER SECTION 244A OF THE ACT TO GRANT INTEREST ON INTEREST. SECTION 244A GRANTS INTEREST ONLY ON THAT AMOUNT OF REFUND THAT IS OUT OF TAX PAID BY THE ASSESSEE OR COLLECTED FROM HIM AND NOT ON THE AMOUNT DUE TO THE ASSESSEE BUT WITHHELD BY THE REVENUE, SUCH AS INTEREST DUE THOUGH INCLUDED IN THE AMOUNT OF REFUND UNDER SECTION 240 BY VIRTUE OF CERTAIN DECISIONS GRANT INTEREST ON INTEREST IS MORE BY WAY OF COMPENSATION UNDER GENERAL PRINCIPLES AND NOT UNDER THE ACT. THE AR RELIED ON SANDVIK ASIA LTD. V CIT (2006) 280 ITR 643 (SC) WHEREIN IT WAS HELD THAT ONLY REFUND OF EXCESS TAX HAD BEEN GIVEN, BUT NO INTEREST ON REFUND HAS BEEN GIVEN TO THE ASSESSEE ALONG WITH THAT. THIS INTEREST WAS RETAINED BY THE DEPARTMENT FOR A PERIOD OF RANGING UP TO 17 YEARS IN RESPECT OF VARIOUS ASSESSMENT ORDERS. IT WAS UNDER THESE CIRCUMSTANCES, THE HON ' BLE SUPREME COURT HAS HELD THAT THE ASSESSEE HAS BEEN DEPRIVED OF AN AMOUNT OF RS 40 LAKHS FOR NO DEFAULT ITS OWN FOR THE PAID RANGING UP TO 17 YEARS WITHOUT ANY COMPENSATION WHATSOEVER FROM THE DEPARTMENT. UNDER THESE CIRCUMSTANCES UNDER THE GENERAL PRINCIPLES OF LAW THE COURT HAS HELD THAT WITHHOLDING OF INTEREST WAS ALSO UNJUSTIFIED AS THIS HAD BECOME PART OF THE REFUND DUE TO ASSESSEE ALONG WITH TAX; INTEREST ON THIS AMOUNT WAS ALSO PAYABLE. THEREFORE, HON'BLE SUPREME COURT HAS ALLOWED THE INTEREST AS COMPENSATION AND NOT INTEREST ON INTEREST AS PER PROVISIONS OF INCOME- TAX ACT, 1961. THE AHMEDABAD TRIBUNAL IN CASE OF GUJARAT SATE FERTILIZERS & CHEMICALS LTD V ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 9 OF 12 DCIT (ITA 2348-2349/AHD/2004)(AY1995-96) DATED 31-07-2006 HAS DISCUSSED THE DECISION OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643 (SC) AND DISMISSED THE ASSESSEE S CLAIM OF INTEREST ON INTEREST. THE INCOME-TAX AUTHORITIES CAN PAY INTEREST ON INTEREST IF THE STATUTE PROVIDES FOR THE SAME AND NOT OTHERWISE. THE CIT (A) AS AN APPELLATE AUTHORITY, IT IS NOT A COURT OF EQUITY. IT HAS THEREFORE, TO A CT AS PER PROVISIONS OF INCOME- TAX ACT, 1961 AND IF A BENEFIT OR RELIEF IS NOT AVAILABLE TO AN ASSESSEE UNDER THE PROVISIONS OF THE ACT IT CANNOT BE GRANTED ON THE GROUND OF EQUITY OR THE GENERAL PROVISIONS OF LAW AS CAN BE GRANTED BY HIGH COURT OR THE SUPREME COURT IN THEIR WRIT JURISDICTION. THE COURTS HAVE INHERENT POWER TO GRANT COMPENSATION FOR WRONGFUL DETENTION OF THE MONEY. HOWEVER THE INCOME- TAX ACT, 1961 HAS NO PROVISIONS TO GRANT SUCH COMPENSATION. THEREFORE I AM OF THE VIEW THAT THE APPELLANT IS NOT ENTITLED TO INTEREST ON INTEREST AS IT HAS NOT BEEN PROVIDED UNDER SECTION 244A OF THE ACT. RELIANCE IS PLACED ON THE DECISION IN THE CASE OF NIRMA CHEMICALS WORKS LTD. V JCIT (2009) (29 DTR (AHD)TM)(TRIB)76) (DT.17-7-2009) WHEREIN AFTER DISCUSSING THE DECISION OF SANDVIK ASIA LTD. VS. CIT (2006) 280 ITR 643 (SC), IT WAS HELD THAT PROVISIONS OF SECTION 244A PROVIDE FOR PAYMENT OF INTEREST ON DELAYED PAYMENT OF REFUND BUT DO NOT PROVIDE FOR PAYMENT OF ANY INTEREST ON INTEREST, ASSESSEE IS NOT ENTITLED TO ANY INTEREST ON INTEREST GRANTED ON REFUND DUE TO IT, IN THE ABSENCE OF ANY PROVISION IN THE ACT TO GRANT SUCH INTEREST, SUCH RELIEF CANNOT BE GRANTED BY THE TRIBUNAL ON THE GROUND OF EQUITY. SIMILARLY IN THE CASE OF MOTOR & GENERAL FINANCE LTD. VS. CIT [2009J 31DTR (DEL) 170) (DT.30.10.09) IT WAS HELD THAT WHEN THE REFUND OF TAX BECOMES PAYABLE AS A RESULT OF ORDERS PASSED BY IN APPEAL OR OTHER PROCEEDINGS UNDER THE ACT, THIS REFUND IS TO BE GIVEN ALONG WITH INTEREST, WHICH IS TO BE CALCULATED AS PER SECTION 244A OF THE ACT. IF THAT INTEREST IS PAID ALONG WITH THE EXCESS TAX, NO FURTHER PAYMENT IS TO BE MADE. IT IS ONLY WHEN THE EXCESS AMOUNT OF TAX IS REFUNDED BUT THE INTEREST IS NOT REFUNDED ALONG THEREWITH, THE RETENTION OF INTEREST AMOUNT WOULD BECOME UNJUSTIFIED AND INTEREST ON INTEREST WOULD ALSO ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 10 OF 12 BECOME PAYABLE. THE REASON IS SIMPLE; IT IS THE TAX WHICH WAS PAID IN EXCESS BY THE ASSESSEE WHICH BECOMES REFUNDABLE. THE ASSESSEE WOULD BE COMPENSATED BY PAYING INTEREST THEREUPON. IT IS ONLY WHEN THE INTEREST WHEN THE INTEREST IS NOT REFUNDED ALONG WITH EXCESS TAX THAT WITHHOLDING OF THE SAID INTEREST BECOMES UNJUSTIFIED AND IT BECOMES AN 'AMOUNT DUE' TO THE ASSESSEE ON WHICH THE ASSESSEE CAN CLAIM FURTHER INTEREST. SUCH A SITUATION HAS NOT HAPPENED IN THE PRESENT CASE AS THE AMOUNT OF INTEREST IS CALCULATED AND REFUNDED ALONG WITH THE REFUNDABLE TAX AMOUNT. SIMILARLY IN THE CASE OF APPELLANT ALSO REFUND WAS ISSUED WITH INTEREST UNDER SECTION 244A OF THE ACT HENCE, THEREFORE AS PER THE RATIO LAID DOWN BY HON'BLE HIGH COURT OF DELHI INTEREST ON INTEREST CANNOT BE GRANTED IN THIS CASE. MOREOVER, THE ORDER UNDER APPEAL IS PASSED UNDER SECTION 154 OF THE ACT; HENCE SUCH DEBATABLE ISSUE CANNOT BE DECIDED UNDER SECTION 154 OF THE ACT. SIMILARLY, THE DECISIONS OF TRIBUNAL AS REFERRED ABOVE (SUPRA) BY THE AR ARE ALSO DISTINGUISHABLE AS IN THE SAID DECISIONS THE TRIBUNAL HAVE NO OCCASION TO CONSIDER THIS ASPECT THAT THE HON'BLE SUPREME COURT HAS GRANTED COMPENSATION ONLY UNDER THE GENERAL PRINCIPLE OF LAW ON ACCOUNT OF EQUITY FOR WRONGFULLY DETENTION OF FUND OF THE PARTICULAR APPELLANT FOR MORE THAN 12-17 YEARS AND NOT INTEREST ON INTEREST UNDER THE PROVISIONS OF INCOME- TAX ACT, 1961. THE HON'BLE SUPREME COURT HAS NOT HELD THAT SECTION 244A PROVIDE SUCH PROVISION OF INTEREST ON INTEREST. IF THESES, FACTS HAD BEEN BROUGHT TO THEIR NOTICE THEIR DECISION WOULD HAVE BEEN OTHERWISE. THEREFORE, WITH DUE RESPECT TO ABOVE FACTS AND FOLLOWING THE THIRD MEMBER DECISION OF THE HON'BLE AHMADABAD'S TRIBUNAL AND THE HON'BLE HIGH COURT, I HOLD THAT THE APPELLANT IS NOT ENTITLED INTEREST ON INTEREST UNDER SECTION 244A OF THE ACT AS THERE ARE NO PROVISIONS IN INCOME- TAX ACT, 1961 BY WHICH INCOME-TAX AUTHORITIES CAN GRANT SUCH COMPENSATION. IN THE LIGHT OF THESE FACTS, THIS GROUND OF APPEAL IS DISMISSED 5.3 REFERRING TO THE ORDERS OF AO AND THE CIT (A) I T WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT ASSESSEE WAS ENTITLED FOR ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 11 OF 12 INTEREST ON INTEREST FOR THE BROKEN PART PERIOD AS PER THE ORDERS OF THE HON'BLE SUPREME COURT. IT WAS FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE IN ITA NOS. 3789, 3790 AND 4182 /MUM/2010 DATED 27 TH APRIL, 2012 THE ISSUE WAS CONSIDERED IN FAVOUR OF ASSESSEE, THEREFORE, AO MAY BE DIRECTED TO ALLOW SI MILARLY. 5.4 WE HAVE CONSIDERED THE ISSUE. THE ITAT IN THE ABOVE REFERRED ORDER HAS CONSIDERED THE SAME AS UNDER: 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE I N AS MUCH AS IT IS ALSO NOT IN DISPUTE THE A.O. HAS NOT GRANTED THE INTEREST U/S 244A UPTO THE DATE OF ISSUE /RECEI PT OF REFUND. 7. IN SANDVIK ASIA LTD. (SUPRA) IT HAS BEEN HELD TH AT 'THE ASSESSEE WAS ENTITLED TO INTEREST ON THE AMOUNTS OF INTEREST PAID UNDER SECTION 214 4 AND/OR SECTION 24 4, AND THAT THE DEPARTMENT WAS BOUND TO GRANT INTEREST WHICH HAD ACCRUED FOR THOSE PERIODS'. 8. IN H.E.G. LTD.(SUPRA) IT HAS BEEN HELD (HEAD NOT E OF (2010) 324 ITR 331(SC): 'HELD, REJECTING THE CLAIM OF THE DEPARTMENT, THAT THE INTEREST COMPONENT PARTOOK OF THE CHARACTER OF 'AMOUNT DUE' UNDER SECTION 244A AND BECAME AN INTEGRAL PART OF RS. 45,73,528/- WHICH WAS NOT PAID FOR 57 MONTHS AFTER THAT AMOUNT BECAME PAYABLE. THE ASSESSEE WAS ENTITLED TO INTEREST FOR 57 MONTHS ON RS. 45,73,528/-.' 9. IN THE DEVELOPMENT BANK OF SINGAPORE LTD. (SUPRA ) THE TRIBUNAL DIRECTED THE A.O. TO ALLOW INTEREST ON INT EREST IN ACCORDANCE WITH THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. (SUPRA). 10. RESPECTFULLY FOLLOWING THE AUTHORITATIVE PRONOUNCEMENT OF THE HON'BLE SUPREME COURT IN H.E.G . LTD. (SUPRA) WE ARE OF THE VIEW THAT ALL THE DECISI ONS RELIED ON BY THE REVENUE ARE DISTINGUISHABLE AND NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE. THIS B EING SO WE DIRECT THE A.O. TO ALLOW THE INTEREST U/S 244A I N ACCORDANCE WITH THE DECISION OF HON'BLE APEX COURT IN THE ITA NO.3791 OF 2010 DEUTSCHE BANK AG MUMBAI PAGE 12 OF 12 CASE OF H.E.G. LTD. (SUPRA). THE COMMON GROUNDS TAK EN BY THE ASSESSEE IN ALL THESE THREE APPEALS ARE, THE REFORE, ALLOWED. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT AO TO CA LCULATE THE INTEREST ACCORDINGLY AND ALLOW THE SAME. IN THE RES ULT, THE GROUND 3 RAISED BY ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2013 SD/- SD/- (DR. S.T.M. PAVALAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10TH APRIL, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI