BANK OF INDIA, MUMBAI V. ACIT 2(1), MUMBAI

ITA 4707/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6210 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 11-10-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 11-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Assessee Lawyers: R V CHANIYARI
• Keywords: Right to appeal
• Section: 244A; 246

Judgement Text

1 ITA 4707/M/09, BANK OF INDIA IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H BEFORE SHRI P.M. JAGTAP, AM AND SHRI R.S. PADVEKAR, JM ITA NO. 4707/MUM/2009 ASSESSMENT YEAR 1999-2000 BANK OF INDIA, TAXATION DEPARTMENT, 8 TH FLOOR, STAR HOUSE, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI . PAN AAACB0472C VS. THE ASSISTANT COMMISSIONER OF INCOME TAX 2(1), AAYAKAR BHAWAN, MUMBAI 20. APPELLANT RESPONDENT APPELLANT BY SHRI R.V. CHANIYARI RESPONDENT BY SHRI AJIT KUMAR SINHA ORDER PER P.M. JAGTAP, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) III, MUMBAI DATED 25.6.07 WHEREBY HE DISMISSED THE APPEAL OF TH E ASSESSEE DISPUTING THE QUANTUM OF INTEREST PAYABLE U/S 244A TREATING THE SAME AS NOT MAINTAINABLE. 2. THE ASSESSEE IN THE PRESENT CASE IS A PUBL IC SECTOR BANK. WHILE GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) DATED 24.12.08 PASSED IN TH E CASE OF THE ASSESSEE, INTEREST U/S 244A WAS COMPUTED BY THE A.O. BY AFTER SETTING OFF AND ADJUSTING MAT CREDIT OF ` 7.24 CRORES AGAINST THE TAX LIABILITY ONLY AFTER ADJUSTI NG AND SETTING OFF ADVANCE TAX PAID AND TAX DEDUCTED AT SOURCE FIRST. ACCORDING TO THE ASS ESSEE, THE A.O. OUGHT TO HAVE SET OFF AND ADJUSTED MAT CREDIT BEFORE SETTING OFF AND ADJUSTIN G ADVANCE TAX AND TAX DEDUCTED AT SOURCE FOR THE PURPOSE OF COMPUTING INTEREST U/S 24 4A. AN APPEAL, THEREFORE, WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) SEE KING DIRECTION TO THE A.O. TO RE- COMPUTE THE INTEREST U/S 244A ACCORDINGLY. DURING THE COURSE OF APPELLATE PROCEEDINGS, 2 ITA 4707/M/09, BANK OF INDIA THE ASSESSEE WAS CALLED UPON BY THE LD. CIT(A) TO J USTIFY THE MAINTAINABILITY OF ITS APPEAL SINCE THE ONLY ISSUE INVOLVED THEREIN WAS REVOLVING AROUND THE COMPUTATION OF INTEREST U/S 244A. IN REPLY, RELIANCE, INTER ALIA, WAS PLACED B Y THE ASSESSEE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BRITISH BANK OF MI DDLE EAST VS. CIT 266 ITR 269 IN SUPPORT OF ITS CONTENTION THAT THE APPEAL FILED BEF ORE THE LD. CIT(A) WAS MAINTAINABLE. THE LD. CIT(A), HOWEVER, DID NOT FIND MERIT IN THE SAID CONTENTION OF THE ASSESSEE AND DISMISSED ITS APPEAL AS NOT MAINTAINABLE FOR THE FO LLOWING REASONS GIVEN IN PARA NO. 1.1 OF HIS IMPUGNED ORDER: I HAVE PERUSED THE GROUND OF APPEAL, THE FACTS OF T HE CASE AND THE VARIOUS DECISIONS RELIED UPON BY APPELLANT. I AM IN AGREEM ENT WITH THE APPELLANT ON THE ISSUE THAT ON ORDER GIVING EFFECT TO THE ORDER OF A PPELLATE AUTHORITIES IS NOTHING BUT AN ASSESSMENT ORDER. CONSEQUENTLY, AN APPEAL CAN LI E AGAINST SUCH AN ORDER. AT THE SAME TIME, I FIND THAT INTERPRETATION OF TAXING STA TUTES CLEARLY HOLD THAT THERE IS NO INHERENT RIGHT OF APPEAL. IT HAS TO BE SPECIFICALL Y CONFERRED BY THE STATUTE. AT THE SAME TIME, IF THERE IS A SPECIFIC PROVISION CONFERR ING SUCH RIGHT OF APPEAL, IT SHOULD BE CONSTRUED LIBERALLY. I FIND THAT SECTION 246 DO ES NOT MENTION INTEREST TO BE ONE OF THE ISSUES ON WHICH APPEAL CAN BE FILED. THE ISSUE THEN IS THE BASIS OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BRITISH BA NK AND THAT OF INDORE BENCH OF ITAT AICH AAR CHEMICALS (O) LTD. THE PERUSAL OF TH ESE DECISIONS REVEALS THAT IN A SITUATION WHERE THERE IS DENIAL OF LIABILITY TO INT EREST, APPEAL SHALL LIE. IN THE INSTANT CASE THERE IS NO DENIAL OF LIABILITY OF INTEREST. THE DISPUTE IS ON THE QUANTIFICATION OF INTEREST. THIS QUANTIFICATION OF INTEREST IS DEPEN DENT UPON, IN THE PRESENT FACTS OF THE CASE, THE STAGE OF CALCULATION AT WHICH THE CREDIT FOR TAX OF MAT IS TO BE GIVEN FOR CALCULATING THE INTEREST. IT IS PURELY PROCEDURAL. CONSEQUENTLY, THE QUESTION OF DENIAL OF LIABILITY TO INTEREST DOES NOT ARISE AT A LL IN THE PRESENT FACTS OF THE CASE. THE DECISIONS RELIED UPON BY APPELLANT THEREFORE DO NOT SUPPORT THE CASE UNDER CONSIDERATION. IT NEEDS PARTICULAR MENTION THAT IN THE CASE OF CALTEX OIL REFINING THE DECISION WAS BASED UPON THE FACT THAT UNDER THE PR OVISIONS OF SECTION 214(1A) OF INCOME TAX ACT, INTEREST UNDER SECTION 214 WAS DEEM ED TO BE TAX FOR THE PURPOSE OF THE ACT WHICH IS NOT SO IN THE PRESENT FACTS OF THE CASE. CONSEQUENTLY, THIS INTEREST IS NOT ONE OF THE ITEMS AS SPECIFIED IN SECTION 246 AN D, SINCE THE LIABILITY TO INTEREST IS NOT AN ISSUE UNDER CONSIDERATION, THIS APPEAL CANNO T BE MAINTAINED AND IS DISMISSED AS NOT MAINTAINABLE. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) , THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS AS APP ROVED BY THE COD. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFTER R EFERRED TO AS CIT (A) HAS ERRED IN DISMISSING THE APPEAL FILED ON THE GROUND THAT A PPEAL AGAINST THE ISSUE OF QUANTIFICATION OF INTEREST IS NOT MAINTAINABLE. TH E LEARNED CIT(A) BE DIRECTED TO 3 ITA 4707/M/09, BANK OF INDIA DISPOSE OFF THE APPEAL ON MERIT AND PASS AN ORDER O N THE GROUNDS RAISED BY THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFTER R EFERRED TO AS CIT (A) HAS ERRED IN SETTING OFF MAT CREDIT OF ` 7,23,90,710/- TO THE TAX LIABILITY AFTER ADJUSTING ADVANCE TAX AND TAX DEDUCTED AT SOURCE FOR THE PURP OSE OF COMPUTING INTEREST U/S 244A AND ERRED IN SHORT-ALLOWING INTEREST U/S 244A AND LEARNED CIT(A) ERRED IN NOT DISPOSING THE ISSUE RAISED BEFORE HIM. THE LEARNED ACIT BE DIRECTED TO ALLOW INTEREST ON TAX REFUND AFTER ADJUSTING MAT AND GRAN T REFUND ACCORDINGLY. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SID ES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT A SIMILAR I SSUE AS INVOLVED IN THE PRESENT CASE HAD COME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BRITISH BANK OF MIDDLE EAST (SUPRA), INTER ALIA, IN THE CON TEXT OF COMPUTATION OF INTEREST U/S 244(1A). IN THE SAID CASE, WHILE GIVING EFFECT TO THE ORDER OF THE LD. CIT(A), THE A.O. HAD NOT GRANTED INTEREST U/S 244(1A) CLAIMED BY THE ASS ESSEE ON A SUM OF ` 4,87,236/- WHICH WAS PAID ON DEMAND. THE ASSESSEE, THEREFORE, CARRI ED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE SAID APPEAL AS NOT MAINTAI NABLE U/S 246(1). THE TRIBUNAL UPHELD THE ORDER PASSED BY THE LD. CIT(A) AND THE A SSESSEE CARRIED THE MATTER TO THE HONBLE BOMBAY HIGH COURT BY WAY OF A REFERENCE. T HE HONBLE BOMBAY HIGH COURT FOUND THAT THERE WAS NO DENIAL BY THE DEPARTMENT FO R PAYMENT OF INTEREST U/S 244(1A) AND IT WAS MERELY A CASE WHERE INTEREST U/S 244(1A) WAS NOT FULLY PAID THROUGH OMISSION. THE HONBLE BOMBAY HIGH COURT HELD THAT THE TRIBUNAL TH EREFORE WAS RIGHT IN COMING TO THE CONCLUSION THAT THE APPEAL FILED BY THE ASSESSEE BE FORE THE LD. CIT(A) CLAIMING SUCH INTEREST WAS NOT MAINTAINABLE U/S 246(1)(C). THEIR LORDSHIPS OF HONBLE BOMBAY HIGH COURT HOWEVER FOUND MERIT IN THE ALTERNATIVE ARGUME NT RAISED ON BEHALF OF THE ASSESSEE THAT THE SAID APPEAL WAS MAINTAINABLE U/S 246(1)(F) . FOR THIS CONCLUSION, THE HONBLE BOMBAY HIGH COURT RELIED ON ITS EARLIER ORDER PASSE D IN THE CASE OF EMPIRE INDUSTRIES LTD. VS. CIT 193 ITR 295 WHEREIN IT WAS HELD THAT T HE ITOS ORDER WHILE GIVING EFFECT TO THE APPELLATE ORDER HAVING BEEN PASSED U/S 154, AN APPEAL THEREFROM WAS COMPETENT U/S 246(1)(F). THE HONBLE BOMBAY HIGH COURT HELD THAT THE SAID JUDGMENT WAS APPLICABLE TO THE FACTS OF THE CASE BEFORE IT AS THE A.O. IN T HAT SAID CASE WAS ALSO CONCERNED WITH 4 ITA 4707/M/09, BANK OF INDIA GIVING EFFECT TO THE ORDER PASSED BY THE LD. CIT(A) WHEN HE FAILED TO GRANT INTEREST U/S 244(1A). THE HONBLE BOMBAY HIGH COURT HELD IN THE CASE OF BRITISH BANK OF MIDDLE EAST (SUPRA) THAT THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE A.O. WHILE GIVING EFFECT TO THE APPELLATE ORDER DISPUTIN G THE COMPUTATION OF INTEREST PAYABLE U/S 244A THUS WAS MAINTAINABLE BEFORE THE LD. CIT(A ) U/S 246(1)(F). IN OUR OPINION, THE RATIO OF THE SAID DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND RESPECTFULLY F OLLOWING THE SAME, WE HOLD THAT THE APPEAL FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) DISPUTING THE INTEREST U/S 244(A) COMPUTED BY THE A.O. WHILE GIVING EFFECT TO THE APP ELLATE ORDER WAS MAINTAINABLE U/S 246(1)(F). ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) DISMISSING THE SAID APPEAL TREATING THE SAME AS NOT MAINTAINABLE A ND REMIT THE MATTER BACK TO HIM WITH A DIRECTION TO DISPOSE OF THE APPEAL OF THE ASSESSEE ON MERITS. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2010. SD/- SD/- (R.S. PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI, DATED 30 TH NOVEMBER , 2010. RK 5 ITA 4707/M/09, BANK OF INDIA COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - 33 - MUMBAI 4. THE CIT- -23, MUMBAI 5. THE DR BENCH, SMC 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 6 ITA 4707/M/09, BANK OF INDIA DATE INITIALS 1. DRAFT DICTATED 23.11.10 SR.P.S./P.S. 2. DRAFT PLACED BEFORE AUTHOR 24.11.10 SR.P.S./P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. - J.M./A.M. 4.DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER. J.M./A.M. 5. APPROVED DRAFT COMES TO THE SR.P.S./P.S. SR.P.S./P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S. 8. DATE OF WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.