ICICI LTD, V. JT CIT (I TAX),

ITA 4810/MUM/2003

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9119 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-12-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 23-06-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 234B; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , . . ! , ' #$ % BEFORE SHRI B.R. MITTAL, JM AND SHRI N.K. BILLA IYA, AM ./I.T.A. NO. 4810/MUM/2003 ( & & & & / ASSESSMENT YEAR : 1998-99 M/S. ICICI BANK LTD. (ERSTWHILE ICICI LTD. AS AGENT OF MORGAN GUARANTY INTERNATIONAL FINANCE CORPN), ICICI BANK TOWERS, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 / VS. THE JCIT(INTERNATIONAL TAXATION) AAYAKAR BHAVAN, MUMBAI-400 020 ./I.T.A. NO. 4441/MUM/2003 ( & & & & / ASSESSMENT YEAR : 1998-99 THE JCIT(INTERNATIONAL TAXATION) AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. ICICI BANK LTD. (ERSTWHILE ICICI LTD. AS AGENT OF MORGAN GUARANTY INTERNATIONAL FINANCE CORPN), ICICI BANK TOWERS, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 $' ' ./ () ./PAN/GIR NO. : AAACT 1398K ( '* /APPELLANT ) .. ( +, '* / RESPONDENT ) '* - / APPELLANT BY: MS. ARATI VISSANJI +,'* . - / RESPONDENT BY : SHRI RAJARSHI DWIVEDY . /0' / DATE OF HEARING : 12.12.2012 12& . /0' / DATE OF PRONOUNCEMENT : 14.12.2012 #3 / O R D E R PER N.K. BILLAIYA, AM: THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-XXXI, MUMBAI DT. ITA NOS. 4810 & 4441/M/03 2 7.2.2003 PERTAINING TO ASSESSMENT YEAR 1998-99. AS A MATTER OF CONVENIENCE, WE HEARD THESE APPEALS TOGETHER AND D ISPOSE OFF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 4810/MUM/2003- ASSESSEES APPEAL 2. GROUND NO. 1 RELATES TO THE DOUBLE ASSESSMENT OF NON-RESIDENT ASSESSEE AND REPRESENTATIVE ASSESSEE ON LONG TERM C APITAL GAINS AT RS. 1,23,-6,590/-. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAD PURCHASED 33,33,800 SHARES OF ICICI ASSET MANAGEMENT CO. LTD. ( IAMC) FROM M/S. MORGAN GUARANTEE INTERNATIONAL FINANCE CORPN. (MGIFC) DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1998-99. SINCE MG IFC BEING A NON-RESIDENT WAS IN RECEIPT OF THE INCOME FROM THE ASSESSEE, THE ASSESSING OFFICER SENT NOTICE TO THE ASSESSEE TO SHOW CAUSE WHY IT SHOULD NOT BE TREATED AS AGENT OF MGIFC U/S. 163 OF THE ACT. AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE AN ORDER U/S. 163 OF THE ACT WAS PASSED TREATING TH E ASSESSEE AS AGENT OF MGIFC. THEREAFTER, NOTICE U/S. 148 DT. 7.3.2001 WAS ISSUED AND SERVED UPON THE ASSESSEE TO ASSESS THE INCOME OF MGIFC IN THE H ANDS OF THE ASSESSEE AS AGENTS. THE ASSESSEE FILED THE RETURN UNDER PROTES T DECLARING TOTAL INCOME ON ACCOUNT OF LTCG AT RS. 78,97,700/-. 4. THE ASSESSING OFFICER OBSERVED THAT MGIFC HAS SOL D 33,33,800 SHARES OF IAMC. THE SALE WAS AS PER THE AGREEMENT DT. 12. 8.1997 BY WHICH IT WAS MUTUALLY AGREED UPON BY THE PARTIES THAT THE DATE O F SALE WOULD BE DECIDED MUTUALLY AND WHICH WAS CLAIMED AS JANUARY,13, 1998 AND ACCORDINGLY, THE LTCG WORKED OUT BY THE ASSESSEE WAS COMPUTED AT RS . 78,97,700/-. HOWEVER, IN THE OPINION OF THE AO, SINCE THE APPROV AL FROM THE RESERVE BANK OF INDIA WAS TAKEN ON 3.10.1997 THEREFORE THAT DATE SHOULD BE TAKEN FOR THE CALCULATION OF LTCG AND THEREFORE APPLYING THE EXCH ANGE RATE AS ON 3.10.1997, THE AO COMPUTED THE CAPITAL GAINS AT RS. 1,23,06,590/-. ITA NOS. 4810 & 4441/M/03 3 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS OF THE AS SESSEE, THE LD. CIT(A) OBSERVED AT PARA 6.1 AT PAGE-4 OF HIS ORDER THAT A SIMILAR ISSUE HAS ARISEN IN THE ASSESSMENT MADE DIRECTLY ON THE NON-RESIDENT AS SESSEE I.E. MGIFC AND APPEAL AGAINST THE SAID ASSESSMENT HAS ALREADY BEEN DECIDED BY THE VERY SAME LD. CIT(A) IN APPEAL NO. CIT(A)XXXI/DC.CIR2(1) /IT. NO. 79/01-02/02-03 ORDER DT. 1.2.2003 AND FOLLOWING THE DECISION IN TH E CASE OF MGIFC, THE CIT(A) CONFIRMED THE ACTION OF THE AO IN COMPUTING THE LTCG AT RS. 1,23,06,589/-. 6. AGGRIEVED BY THIS FINDING OF THE LD. CIT(A), THE ASSESSEE IS BEFORE US. TAKING A LEAF OUT OF THE FINDINGS OF THE LD. CIT(A) , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONCE THE INCOME HAS BEEN AS SESSED IN THE HANDS OF THE NON-RESIDENT ASSESSEE I.E. MGIFC, THEIR REMAINS NO REASON TO ASSESS THE SAME INCOME IN THE HANDS OF THE ASSESSEE BY TREATIN G IT AS A REPRESENTATIVE ASSESSEE. 7. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND FIND FORCE IN T HE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. PERUSING THE ORDER OF THE CIT[A] IT CAN BE SAFELY CONCLUDED THAT THE INCOME HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE PRINCIPAL , MGIFC , AND THE SAME INCOME IS NOW BEING TAXED IN THE HANDS OF THE ASSESSEE TREATING IT AS A REPRESENTATIVE ASSESS EE U/S. 163 OF THE ACT. SECTION 163 COMES UNDER CHAPTER XV LIABILITY IN S PECIAL CASES REPRESENTATIVE ASSESSEE. A PERUSAL OF THE PROVISION S OF THIS CHAPTER SHOW THAT TO SAFEGUARD THE INTEREST OF THE REVENUE, A LIABIL ITY OF REPRESENTATIVE ASSESSEE HAS BEEN FIXED AS PER SECTION 161 OF THE ACT WHICH READS AS UNDER: ITA NOS. 4810 & 4441/M/03 4 EVERY REPRESENTATIVE ASSESSEE, AS REGARDS THE INCO ME IN RESPECT OF WHICH HE IS A REPRESENTATIVE ASSESSEE , SHALL BE SUBJECT TO THE SAME DUTIES, RESPONSIBILITIES AND LI ABILITIES AS IF THE INCOME WERE INCOME RECEIVED BY OR ACCRUING T O OR IN FAVOUR OF HIM BENEFICIALLY, AND SHALL BE LIABLE TO ASSESSMENT IN HIS OWN NAME IN RESPECT OF THAT INCOME; BUT ANY SUCH ASSESSMENT SHALL BE DEEMED TO BE MADE UPON HIM IN H IS REPRESENTATIVE CAPACITY ONLY, AND THE TAX SHALL, SU BJECT TO THE OTHER PROVISIONS CONTAINED IN THIS CHAPTER, BE LEVI ED UPON AND RECOVERED FROM HIM IN LIKE MANNER AND TO THE SA ME EXTENT AS IT WOULD BE LEVIABLE UPON AND RECOVERABLE FROM THE PERSON REPRESENTED BY HIM. 9. A PERUSAL OF THIS SECTION SUGGESTS THAT A REPRES ENTATIVE ASSESSEE IS LIABLE TO PAY TAXES IN THE SAME MANNER IN WHICH THE PERSON TO WHOM HE IS REPRESENTING WOULD HAVE PAID THE TAX. IN THE INSTA NT CASE, SINCE THE PRINCIPAL I.E. MGIFC HAS ALREADY BEEN TAXED FOR LON G TERM CAPITAL GAINS UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE EVEN THOUGH RIGHTLY TREATED AS REPRESENTATIVE ASSESSEE CANNOT BE TAXED ON THE SAME INCOME. TO THIS EXTENT, THE ORDERS OF THE LOWER AUTHORITIES ARE ERRONEOUS. THEREFORE, WE DIRECT THE AO TO DELETE THE LTCG FROM THE HANDS OF THE ASSESSEE. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 10. GROUND NO.2 RELATES TO THE ERRONEOUS FIXING OF DATE OF SALE FOR CALCULATION OF CAPITAL GAINS BY THE AO. 11. AS WE HAVE DIRECTED THE AO TO DELETE THE LTCG F ROM THE HANDS OF THE ASSESSEE, GRIEVANCE RAISED BY GROUND NO. 2 BECO ME OTIOSE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 4441/MUM/2003 REVENUES APPEAL ITA NOS. 4810 & 4441/M/03 5 13. THE ONLY GROUND RAISED BY THE REVENUE RELATES T O DELETION OF INTEREST U/S. 234B & 234C OF THE I.T. ACT. 14. AS WE HAVE DIRECTED THE AO TO DELETE THE LTCG F ROM THE HANDS OF THE ASSESSEE IN ITA NO. 4810/M/03 IN ASSESSEES APP EAL, THIS ISSUE IS RESTORED BACK TO THE FILE OF THE AO TO RE-COMPUTE T HE LEVY OF INTEREST U/S. 234B & 234C OF THE ACT IF THE ASSESSEE COMPANY HAS INCOME OTHER THAN LTCG ON WHICH IT WAS LIABLE TO PAY ADVANCE TAX. NE EDLESS TO MENTION, THE AO IS DIRECTED TO AFFORD A REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE CROSS APPEAL FILED BY THE REVENUE IS ALLOWED FO R STATISTICAL PURPOSES. 4 /5 4/ . 6 3 $7/ ($ . 6 8. 9:; $7/ . (/ < ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2012 . #3 . 2& ' 6 =#5 14.12.2012 2 . > SD/- SD/- (B.R.MITTAL) (N.K. BILLAIYA) #$ /JUDICIAL MEMBER ' #$ / ACCOUNTANT MEMBER MUMBAI; =# DATED 14.12.2012 . . ./ RJ , SR. PS ITA NOS. 4810 & 4441/M/03 6 #3 #3 #3 #3 . .. . +/ +/ +/ +/ ?&/ ?&/ ?&/ ?&/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. @ ( ) / THE CIT(A)- 4. @ / CIT 5. A> +/ , , / DR, ITAT, MUMBAI 6. >B C / GUARD FILE. #3 #3 #3 #3 / BY ORDER, ,/ +/ //TRUE COPY// 9 99 9 / < < < < ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI