BNP Paribas, V. JCIT Special Range 27,

ITA 4602/MUM/2004

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3382 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 05-12-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 03-06-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDER KUMAR
• Assessee Lawyers: F V IRANI
• Keywords: Retrospective amendment
• Section: 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'L' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 4601 & 4602/MUM/2004 (ASSESSMENT YEARS: 1997-98 & 1998-99) M/S. BNP PARIBAS JCIT, SPECIAL RANGE-27 FRENCH BANK BUILDING SCINDIA HOUSE 62, HOMJI STREET, FORT VS. BALLARD ESTATE MUMBAI 400001 MUMBAI PAN - AAACB4868Q APPELLANT RESPONDENT ITA NO. 7817/MUM/2004 (ASSESSMENT YEAR: 2000-01) M/S. BNP PARIBAS JOINT DIRECTOR FRENCH BANK BUILDING (INTERNATIONAL TAXATION)-3 62, HOMJI STREET, FORT VS. SCINDIA HOUSE, BALLARD ESTATE MUMBAI 400001 MUMBAI PAN - AAACB4868Q APPELLANT RESPONDENT APPELLANT BY: SHRI F.V. IRANI RESPONDENT BY: SHRI NARENDER KUMAR DATE OF HEARING: 01.07.2013 DATE OF PRONOUNCEMENT: 01.07.2013 O R D E R PER BENCH THESE APPEALS ARE FILED AT THE INSTANCE OF THE ASSE SSEE COMPANY AND THEY PERTAIN TO A.Y. 1997-98, 1998-99 AND 2000-01. 2. IN ITA NO. 4061/MUM/2004 AND ITA NO. 7817/MUM/2004 THE ASSESSEE HAS RAISED A COMMON GROUND. THE CASE OF TH E ASSESSEE IS THAT THERE IS DISCRIMINATION AGAINST TAX PAYABLE BY A FO REIGN COMPANY, WHICH IS NOT IN ACCORDANCE WITH LAW. THE RATE OF TAX APPLICA BLE TO DOMESTIC COMPANIES IS 35% AGAINST WHICH THE AO APPLIED 48% OF TAX SINC E IT IS A FOREIGN COMPANY (A.Y. 1997-98). FOR A.Y. 2000-01 THE ASSESS EE CONTENDED THAT FOR DOMESTIC COMPANIES THE RATE OF TAX IS 38.5% (INCLUD ING SURCHARGE) WHEREAS ITA NO. 4601,62 & 7817/MUM/2004 M/S. BNP PARIBAS 2 THE AO APPLIED 48% RATE OF TAX, WHICH IS APPLICABLE TO FOREIGN COMPANIES AND THIS DISCRIMINATION OF RATE OF TAX APPLICABLE TO AS SESSEE COMPANY IS NOT IN ACCORDANCE WITH LAW. IN THE APPEAL FOR A.Y. 1998-99 , VIDE GROUND NO. 2 THE ASSESSEE CONTENDS THAT THE CIT(A) ERRED IN DISCRIMI NATING AGAINST THE APPELLANT BY TAXING ITS INCOME AT THE RATE OF TAX A PPLICABLE TO FOREIGN COMPANIES AS AGAINST THE RATE OF TAX APPLICABLE TO DOMESTIC COMPANIES. 3. BEFORE THE LEARNED CIT(A) THE LEARNED COUNSEL FOR T HE ASSESSEE CITED THE OECD MODEL CONVENTION AND IN PARTICULAR THE NON -DISCRIMINATION CLAUSE, I.E. ARTICLE 26 OF INDIO-FRANCE TREATY TO C ONTEND THAT THERE SHOULD NOT BE ANY DISCRIMINATION BETWEEN DOMESTIC COMPANY AND NON-RESIDENT COMPANY. THE AO AS WELL AS THE CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE. THE CASE OF THE REVENUE IS THAT THE CONTR OVERSY OF DISCRIMINATION IN APPLICABILITY OF TAX RATES HAS BEEN RESOLVED BY INSERTION OF EXPLANATION TO SECTION 90 WITH RETROSPECTIVE EFFECT FROM 01.04.196 2. THE LEARNED CIT(A), IN THE APPEAL FOR A.Y. 1997-98 OBSERVED THAT THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF ACIT VS, J.K. SYNTHETICS IS APPLICABLE TO THE PRESENT CASE. INSERTION OF EXPLANATION IN SECTION 9 0 MAKES IT CLEAR THAT HIGHER RATE OF TAX FOR FOREIGN COMPANY IS NOT TO BE REGARDED AS VIOLATING NON- DISCRIMINATING CLAUSE. THEREFORE, THE RETROSPECTIVE AMENDMENT AND THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF J.K. SYNTHETICS (SUPRA) CANNOT BE IGNORED. IN SUBSTANCE THE ORDER OF THE IT AT F BENCH IN THE CASE DCIT VS. SAKURA BANK (ITA NO. 1230/BOM/95 DATED OCT OBER 31, 2003) WAS FOLLOWED BY THE LEARNED CIT(A). THOUGH THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ITAT HAS TAKEN DIFFERENCE VIEWS ON THIS ISSUE IN SOME CASES, HE HAS NOT PLACED ANY ORDER BEFORE US TO SUP PORT HIS STAND. HE FAIRLY ADMITTED THAT THE ISSUE OTHERWISE IS COVERED AGAINS T THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE ITAT F BENCH, MUMBAI. 4. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A) ON THIS ASPECT. IN THE RESULT, THE ONLY GROUND RAISED BY THE ASSESSEE FOR A.Y. 1997-98 AND 2000-01 AS WELL AS GR OUND NO. 2 IN THE APPEAL FOR A.Y. 1998-99 ARE DISMISSED. 5. THIS LEAVES US WITH GROUND NO. 2 IN THE APPEAL FOR A.Y. 1998-99. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASS ESSEE FILED A CHART TO ITA NO. 4601,62 & 7817/MUM/2004 M/S. BNP PARIBAS 3 HIGHLIGHT THAT THE BANK HAS NOT BEEN ABLE TO UTILIS E THE LOSS INCURRED IN THE REDEMPTION OF SECURITIES AND CARRY FORWARD FOR FUTU RE YEARS FOR SET OFF AND HENCE THE ASSESSEE IS NOT INTERESTED IN PURSUING TH IS GROUND. WE, THEREFORE, DISMISS THIS GROUND AS NOT PRESSED. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JULY, 2013. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 1 ST JULY, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXI, MUMBAI 4. THE DIT (INTERNATIONAL TAXATION), MUMBAI 5. THE DR, L BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.