STATE STREET BANK & TRUST CO A/C, DAILY ACTIVE EMERGING MARKETS FUND, MUMBAI V. ADIT (IT) 2(1), MUMBAI

ITA 4958/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4987 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 04-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: F V IRANI
• Keywords: Source of fund
• Section: 143(3); 142(1); 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4958/MUM/2010 ASSESSMENT YEAR : 2007-08 STATE STREET BANK & TRUST CO. A/C DAILY ACTIVE EMERGING MARKETS FUNDS C/O. S.B. BILLIMORIA & CO. 264-265 VASWANI CHAMBERS DR. ANNIE BESANT ROAD,WORLI MUMBAI-400 018. PAN NO.AAGCS 6253 G VS. ASSISTA N T DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-2(1) MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI F.V. IRANI REVENUE BY : SHRI SANJEEV JAIN DATE OF HEARING : 04/09/2013 DATE OF PRONOUNCEMENT : 13 / 0 9 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF CIT(A)-2, MUMBAI DATED 24.02.2010. ASSESSEE HAS RAISED FOUR GROUNDS ON THE ISSUE OF NOT GRANTING CREDIT FOR ADVANCE TAX PAID OF RS.12,77,88 1/-. 2. BRIEFLY STATED FACTS AS PER THE ORDER OF THE CIT (A) ARE AS UNDER:- 1.1 THE APPELLANT IS A SUB-ACCOUNT OF THE FOREIG N INSTITUTIONAL INVESTOR M/S STATE STREET BANK & TRUST CO REGISTERED UNDER THE S ECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) ( FOREIGN INSTITUTIONAL INV ESTORS) REGULATIONS. 1995. THE ITA NO.4958/M/10 A.Y.07-08 2 APPELLANT IS INVOLVED IN PURCHASE AND SALE OF SECUR ITIES IN INDIA. THE SOURCES OF INCOME AS STATED BY THE APPELLANT ARE CAPITAL GAINS AND DIVIDEND. THE APPELLANT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR (AY ) 2007-08 ON JULY 26, 2007 DECLARING INCOME IN THE NATURE OF SHORT TERM CAPITA L GAINS ARISING ON SALE OF LISTED SECURITIES OF RS.11,851,172. 1.2 THE APPELLANTS RETURN WAS SELECTED FOR SCRUTI NY AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 (ACT) DATED JULY 30, 2008 WAS ISSUED AND SERVED ON THE APPELLANT ON JULY 31, 2008 BY THE ASSISTANT DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-2(1), MUMBAI (AO). 1.3 IN THE INTERIM, THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON FEBRUARY 11, 2009. PURSUANT TO THE PROCESSING OF THE RETURN UNDER SECTION 143(1) OF THE ACT, THE APPELLANTS RETURNED INCOME WAS TAKEN AS ITS ASSESSED INCOME, HOWEVER, A DEMAND OF RS.1,609,616 WAS RAISE D, AS CREDIT FOR ADVANCE TAX PURPORTEDLY PAID BY THE APPELLANT WAS NOT GIVEN BY PROCESSING THE RETURN U/S 143(1). THE APPELLANT FILED RECTIFICATION APPLI CATION UNDER SECTION 154 OF THE ACT ON APRIL 2, 2009 REQUESTING FOR GRANT OF CREDIT OF ADVANCE TAX OF RS.1,277,881 PAID BY THE APPELLANT. THE AO PASSED A N ORDER UNDER SECTION 154 ON 08.04.2009 ALLOWING THE DESIRED CREDIT OF ADVANC E TAX. 1.4 THEREAFTER, A NOTICE DATED JULY 15, 2009 WAS IS SUED UNDER SECTION 142(1) OF THE ACT AND SERVED ON THE APPELLANT ON JULY 16, 200. IN RESPONSE TO THE NOTICES ISSUED UNDER SECTIONS 143(2) AND 142(1) OF THE ACT, THE APPELLANT MADE THE SUBMISSIONS AND FILED THE REQUESTED INFORMATION . 1.5 DURING THE COURSE OF THE SCRUTINY ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ADVANCE TAX CHALLA N FOR RS.1,277,881 WAS NOT IN THE NAME OF THE APPELLANT BUT IN THE NAME OF STATE STREET BANK & TRUST CO A/C DAILY ACTIVITY EMERGING MARKETS SECURITIES LENDING COMMON TRUST FUND (DAEMSL)(PAN: AAETS 8310 G). THE AO HAD ASKED THE APPELLANT WHY THE CREDIT FOR THE SAME SHOULD BE ALLOWED IN ITS CASE. 1.6 THE APPELLANT PROVIDED ITS RESPONSE THROUGH ITS LETTER DATED SEPTEMBER 24, 2009, WHEREIN IT WAS SUBMITTED THAT THE APPELL ANT HAD INADVERTENTLY MENTIONED THE WRONG NAME AND PAN IN THE TAX CHALLAN USED. THE APPELLANT STATED THAT THE ERROR HAPPENED AT THE TIME OF PREPA RING THE TAX CHALLAN SINCE THE PERSON PREPARING THE CHALLANS INADVERTENTLY QUOTED THE NAME OF THE WRONG ASSESSEE ON THE CHALLAN. THE APPELLANT ARGUED THAT THE APPELLANT AND DAEMSL WERE SUB ACCOUNTS OF SAME FII (IE STATE STREET BANK & TRUSTEE CO) AND THE NAMES OF THE TWO WERE ALSO QUIET SIMILAR DUE TO WHI CH THE MISTAKE OF QUOTING WRONG NAME AND PAN OCCURRED. FURTHER, THE APPELLANT BROUGHT TO THE NOTICE OF THE AO THE FACT THAT THE AMOUNTS WAS PAID OUT OF TH E BANK ACCOUNT OF THE APPELLANT, AND WAS REFLECTED IN THE BANK STATEMENT FILED IN CASE OF THE APPELLANT. FURTHER, THE APPELLANT HAD ALSO SUBMITTE D BEFORE THE ASSESSING OFFICER THAT THE CREDIT FOR THE SAID TAX HAD NOT BE EN CLAIMED IN THE TAX RETURN FOR DAEMSL (COPY OF ITS TAX RETURN WAS ALSO FILED TO SU BSTANTIATE THE SAME). THE APPELLANT ALSO CONFIRMED TO THE AO TO SUBMIT AND IN DEMNITY BOND, IF REQUIRED. ITA NO.4958/M/10 A.Y.07-08 3 1.7 BASED ON THE INFORMATION FILED BY THE APPELLANT IN RESPONSE TO THE NOTICES, THE AO PASSED THE ORDER DATED SEPTEMBER 30 , 2009 UNDER SECTION 143(3) OF THE AC T (ORDER). IN THE SAID ORDER, TH E ASSESSING OFFICER HAS DENIED CREDIT OF ADVANCE TAX OF RS.1,277,881 TO THE APPELL ANT ON THE BASIS THAT THE APPELLANTS MISTAKE CANNOT BE CONSTRUED AS A MISTAK E APPARENT FROM RECORD, WHICH COULD BE RECTIFIED UNDER THE ACT. THE AO HAS STATED THAT THE REMEDIAL PROVISIONS UNDER THE ACT ARE FOR RECTIFYING MISTAKE S APPARENT FROM RECORD AND NOT TO CURE LAPSES ON PART OF THE ASSESSEE. ACCORDI NGLY, THE CREDIT GRANTED TO THE APPELLANT FOR RS.1,277,88 U/S 154 OF THE INCOME TAX ACT 1961 WAS WITHDRAWN. 2.1 THE ASSESSEE CONTESTED BEFORE CIT(A) ABOUT DENI AL OF THE CREDIT FOR ADVANCE TAX GRANTED BY THE AO IN THE ORDER UNDER SE CTION 154 AND RELIED ON VARIOUS CASE LAW. THE LD. CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTIONS AND REJECTED THE ASSESSEES ARGUMENTS A ND UPHELD THE ORDER OF THE AO. 3. WE HAVE HEARD THE LD. COUNSEL AND THE LD. DR. WI THOUT GOING INTO MERITS OR DE-MERITS OF THE VARIOUS ARGUMENTS, WE AR E OF THE OPINION THAT THE ORDER OF AO CAN NOT BE UPHELD. AS CAN BE SEEN F ROM THE FACTS STATED ABOVE AFTER PROCESSING UNDER SECTION 143(1), AO RAI SED DEMAND. ASSESSEE SOUGHT CREDIT OF THE TAX BY AN APPLICATION UNDER SECTION 154 WHICH WAS ACCEPTED BY THE AO AND PASSED AN ORDER UN DER SECTION 154 ON 08.04.2009 ALLOWING THE CREDIT OF ADVANCE TAX. HAVI NG GIVEN THE CREDIT OF THE ADVANCED TAX UNDER SECTION 154, WE ARE UNABLE T O UNDERSTAND HOW A SUCCESSOR AO, WHO IS OF THE SAME RANK CAN HOLD THAT THE ORDER DATED 08/04/2009 WAS WRONG AND SAME WAS WITHDRAWN. THE OR DER OF THE AO UNDER SECTION 143(3) DATED 30/09/2009 IS AS UNDER : - 6. CREDIT FOR ADVANCE TAX; SUBSEQUENT TO THE PROCESSING THE RETURN U/S 143(1) WHEREBY A DEMAND OF RS.16,09,616/- WAS RAISED. THE ASSESSEE H AD FILED RECTIFICATION APPLICATION DATED 02.04.2009 REQUESTING THAT THE CR EDIT FOR ADVANCE TAX OF RS. 12,77,881/- PAID BE GRANTED. AN ORDER U/S 154 WAS PASSED ON 08.04.2009 ALLOWING SUCH CREDIT. DURING THE ASSESSM ENT PROCEEDING, IT WAS OBSERVED THAT THE ADVANCE TAX CHALLANS ARE NOT IN THE NAME OF THE ASSESSEE BUT IN THE NAME SSB&T CO. A/C DAILY ACTIVE EMERGING MARKETS ITA NO.4958/M/10 A.Y.07-08 4 SECURITIES LENDING COMMON TRUST FUND (P.A. NO. AAET S 8310 G). THE SAME WAS BROUGHT TO THE NOTICE OF THE ASSESSEES RE PRESENTATIVE, WHO VIDE LETTER DATED 24.09.09 HAS GIVEN THE FOLLOWING SUBMI SSION: WE WISH TO SUBMIT THAT THE CHALLAN (.) WAS INAD VERTENTLY GENERATED IN THE WRONG NAME OF SSBT & CO. DAILY ACT IVE EMERGING LENDING COMMON TRUST FUND (AAETS 8310 G) INSTEAD OF SSBT & CO. A/S DAILY EMERGING MARKETS FUND (AAGCS 6253 G), A.Y . 2007-08. THE AMOUNT HAS ALSO BEEN CORRECTLY PAID AND DEBITED TO THE ACCOUNT OF SSBT &CO. DAILY ACTIVE EMERGING MARKETS FUND. THIS IS AL SO REFLECTED IN ITS BANK STATEMENT () AND THE ADVANCE TAX CHALLANS F ILED WITH THE TAX RETURN. PLEASE NOTE THAT THE CREDIT FOR THE ABOVE TAX HAS NOT BEEN CLAIMED IN THE TAX RETURN FOR SSBT & CO. A/C DAILY ACTIVE EMER GING MARKETS SECURITIES LENDING COMMON TRUST FUND () ACCORDINGLY, WE REQUEST YOU TO GRANT CREDIT FOR TH E ABOVE ADVANCE TAX OF RS.12,77,811 IN THE SSBT & CO. DAILY ACTIVE EMERGING MARKETS FUND (AAGCS 6253 G). WE ALSO CONFIRM THAT IF REQUIR ED, OUR CLIENTS SHALL SUBMIT AN INDEMNITY BOND. THE ABOVE MISTAKE REFERRED TO BY THE ASSESSEES RE PRESENTATIVE CANNOT BE CONSTRUED AS MISTAKE APPARENT FROM RECORD , WHICH COULD BE RECTIFIED UNDER THE ACT. THE REMEDIAL PROVISIONS UN DER THE ACT ARE FOR RECTIFYING MISTAKES APPARENT FROM THE RECORD AND NO T TO CURE LAPSES ON PART OF THE ASSESSEE. UNDER THE CIRCUMSTANCES, THE REQUE ST OF THE ASSESSEE FOR GRANT OF CREDIT OF RS.12,77,881/- CANNOT BE ENTERTA INED AND THE CREDIT WRONGLY GRANTED U/S 154 IS, HEREBY, WITHDRAWN. 3.1 THE ORDER OF AO IS NOT CORRECT AS HE HAS NO POW ER TO WITHDRAW OR DIFFER FROM THE ORDER ALREADY PASSED IN SAME CAPACI TY. IN CASE ORDER WAS WRONG, THE SAME SHOULD HAVE BEEN SUBJECTED TO PROCE DURE UNDER SECTION 263 OR HAS TO TAKE NECESSARY STEPS BY HIGHER AUTHOR ITY TO WITHDRAW THE ORDER. HOWEVER, HAVING CONSIDERED THE APPLICATION A ND ALLOWING CREDIT IN AN ORDER UNDER SECTION 154, WE ARE OF THE OPINION T HAT THE AO HAS NO POWER TO WITHDRAW THE SAME IN AN ORDER UNDER SECTIO N 143(3) AS WAS DONE BY THE OFFICER IN THIS CASE. THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE AO AND CIT(A) ON THIS ISSUE CAN NOT BE UPHELD ON THIS REASON ALONE. ITA NO.4958/M/10 A.Y.07-08 5 4. EVEN ON MERITS, WE ARE UNABLE TO UNDERSTAND WHY THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE DOES NOT DESERVE C REDIT OF ADVANCE TAX. ADMITTEDLY, THE AMOUNT WAS PAID FROM THE ACCOUNT OF THE ASSESSEE. BY MISTAKE WRONG P.A. NO. WAS QUOTED. HOWEVER, ASSESSE E HAS FURNISHED EVIDENCE THAT THE AMOUNT WAS NOT CLAIMED AS ADVANCE TAX IN OTHER CONCERNS CASE AND ALSO THERE IS NO QUESTION OF GIV ING CREDIT TO THE OTHER ENTITY OF THE SAME FII. IT SEEMS AN INDEMNITY BOND WAS ALSO PROVIDED. IN THE CIRCUMSTANCES, WE ARE UNABLE TO UNDERSTAND HOW THE AO COULD DENY THE CREDIT WHICH WAS PAID TO THE CREDIT OF THE REVE NUE AND CORRECTLY CLAIMED AND ALSO ALLOWED IN ASSESSEES CASE. EVEN ON MERITS, WE DO NOT SEE ANY REASON FOR DENYING THE CREDIT. THEREFORE, W E HAVE NO HESITATION IN CANCELLING THIS PART OF THE ORDER OF AO AND CIT(A) WITH DIRECTION TO GIVE DUE CREDIT, AS WAS GIVEN IN THE ORDER UNDER SECTION 154 DATED 08/04/2009. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH SEPTEMBER, 2013. SD/- SD/- (DR. S.T.M. PAVALAN ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 13/09/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.