DCIT CIR. 7(3)(2), MUMBAI V. PJL CLOTHING INDIA LTD., MUMBAI

ITA 5014/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9631 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Transfer pricing
• Section: 244A; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE SHRI G.S PANNU , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO. 5014 / M/ 20 1 6 ( / ASSESSMENT YEAR: 20 09 - 10 ) DCIT CIR, 7(3)(2) ROOM NO. 669A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020 / VS. PJL CLOTHING INDIA LTD. UNIT NO. 19, SHREE MADHU ESTATE, PANDURANG BUDHKAR MARG, WORLI, MUMBAI. PIN:400018 ./ ./ PAN/GIR NO. : AAACP 2782 R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 09 .0 8 .2017 / DATE OF PRONOUNCEMENT : 22 . 09 .2017 / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30.05.2016 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 13 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 09 - 1 0 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 'ON THE FACTS AND I N THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT(A) ERRED IN GRANTI NG INTEREST UNDER SECTION 244A(1)(B) WHEN THE AMOUNT PAID ON SELF - ASSESSMENT WAS EVEN ACCOR4ING TO THE ASSESSEE NOT PAYAB LE AS TAX. THEREFORE, THE AMOUNT /PAID IN ASSESSEE BY: SHRI SATISH R. MODY (AR) DEPARTMENT BY: SHRI RAJESH KUMAR Y ADAV , DR ITA. NO.5014/M/2014 A.Y. 2009 - 10 2 EXCESS, NOT BEING TAX, WOULD ENTITLE THE ASSESSEE TO THE REFUND OF THE PRINCIPAL AMOUNT PAID ANDNOT FLY INTEREST THEREON.' 2 - 'WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN WANTING INTEREST UNDER SECTION 244A(L)(B) WHEN AS PER EXPLANATION TO SECTION 244A(L)(B) DATE OF PAYMENT OF TAX OR PENALTY WHILE CALCULATING INTEREST MEANS DATE ON AND FROM WHICH THE AMOUNT OF TIES PENALTY SPECIFIED IN THE DEMAND ISSUED UNDER SECTION 156 IS PAID IN EXCESS OF SUCH DEMAND. SELF ASSESSMENT TAX, HOWEVER WAS NOT PAID IN LIEU OF NOTICE UNDER SECTION 156 AND SO THIS PROVISION IS NOT APPLICABLE.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN L AW, THE 14. CIT A) ERRED IN GRANTING INTEREST UNDER SECTION 244A ON ACCOUNT OF PAYMENT OF SELF - ASSESSMENT TIES PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF STOCK HOLDING CORPORATION INDIA PVT. LTD. VS. CIT WITHOUT APPREC IATING THE FACT THAT THE DECISION WAS NOT ACCEPTABLE ON MERITS BUT SIP WAS NOT FILED DUE TO MONETARY LIMIT.' 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 27.09.2009 DECLARING TOTAL INCOME TO THE TUNE OF RS. 74,87,54,023/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT ON 23.10.2010. THEREAFTER T HE RETURN WAS REVISED ON 27.09.2010 D ECLARING THE TOTAL INCOME TO THE TUNE OF RS.75,86,59,174/ - . THE RETURN WAS AGAIN REVISED ON 22.03.2011 DECLARING TOTAL INCOME TO THE TUNE OF RS.69,54,26,252/ - . THE CAS E W AS SELEC TED FOR SCRUTINY , THEREAFTER, NOTICE S U/S 143(2) & 142(1) WERE ISSUED AND SERV ED UPON THE ASSESSEE . THE CASE OF THE ASSESSEE ALSO FELL UNDER TRANSFER PRICING SCRUTINY FOR THE CURRENT ASSESSMENT YEAR. THEREFORE, THE REFERENCE WAS MADE U/S 92CA(1) OF THE I.T. ACT , 1961 TO DCIT TRANSFER PRICING 11(5), MUMBAI, VIDE ORDER DATED ITA. NO.5014/M/2014 A.Y. 2009 - 10 3 11.10.201 0. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEALING IN READYMADE GARMENTS. THE ASSESSEE COMPANY HAS A LICENSE TO MANUFACTURE AND TO MARKET PEPE JEANS LONDON BRAND IN INDIA. IT GETS EITHER GARMENT MANUFACTURE D FROM VARIOUS JOB WORKERS OR PURCHASE FROM VENDORS. THE ASSESSEE WAS HAVING VARIOUS DISTRIBUTION MODELS SUCH AS FORMAL STORES (MULTI BRAND OUTLETS), FRANCHISEES AND STORE MANAGEMENT AGENCIES AND OFF PRICE. THE INCOME OF THE ASSESSEE WAS COMPUTED TO THE TUN E OF RS.69,54,26,252/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED CLAIM OF THE ASSESSEE WITH REGARD TO THE INTEREST U/S 244A OF THE ACT TO THE TUNE OF RS.2,53,63,930/ - . FEELING AGGRIEVED, THE REVENUE HAS FILED THE PRESE NT APPEAL BEFORE US. 4 . WE HAVE HEARD THE A RGUMENT ADVANCED BY THE LD. R EPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CIT(A) HAS WRONGLY ALLOWED THE CLAIM OF THE INTEREST ON REFUND U/S 244A(1)(B) OF THE ACT , T HEREFORE, THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACT AND IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTIONS AND ARGUED THAT THE CLAIM OF THE ASSESSEE W AS ALLOWED BY THE CIT(A) IN VIEW OF THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF STOCK HOLDING CORPORATION INDIA PVT. LTD. VS. CIT THEREFORE, IN THE SAID CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED. IN THE INSTANT CASE, THE ITA. NO.5014/M/2014 A.Y. 2009 - 10 4 CONTR OVERSY BETWEEN THE PARTIES IS IN CONNECTION WITH THE ALLOWANCE OF INTEREST ON REFUND U/S 244A(1)(B) OF THE ACT BY THE CIT(A).IT IS NECESSARY TO KNOW THE REASON ON THE BASIS OF WHICH THE CIT(A) HAS GIVEN THE FINDING. T HE CIT(A) HAS GIVEN THE FOLLOWING FINDI NG.: - I HAVE CAREFULLY CONSIDERED THE AOS ORDER AS WELL AS THE ARS SUBMISSIONS. IT IS CLEAR THAT THE AO HAD RESTRICTED HIMSELF TO THE PROVISIONS OF SECTION 244A(1)(A) OF THE ACT AND HAD NOT TOUCHED UPON THE PROVISIONS OF SECTION 244A(1)(B) OF THE ACT AT ALL. FOR BETTER UNDERSTANDING, THESE PROVISIONS ARE REPRODUCED HEREWITH. INTEREST ON REFUNDS. 244A.(1) WHERE REFUND OF ANY AMOUNT OF BECOMES DUE TO THE ASSESSEE UNDER THIS ACT, HE SHALL, SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ENTITLED TO RECEIVE , IN ADDITION TO THE SAID AMOUNT, SIMPLE INTEREST THEREON CALCULATED IN THE FOLLOWING MANNER, NAMELY: - (A) WHERE THE REFUND IS OUT OF ANY TAX PAID UNDER SECTION 115WJ OR COLLECTED AT SOURCE UNDER SECTION 206C OR PAID BY WAY OF ADVANCE TAX OR TREATED AS PAID U/S 199, DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUCH INTEREST SHALL BE CAL CULATED AT THE RATE OF ONE - HALF PERCENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1 ST DAY OF APRIL OF THE ASSESSMENT YEAR TO THE DATE ON WHICH THE REFUND IS GRANTED. PROVIDED THAT NO INTEREST SHALL BE PAYABLE IF THE AMOUNT OF REFU ND IS LESS THAN TEN PER CENT OF THE TAX AS DETERMINED UNDER SUB - SECTION (1) OF SECTION 115WE OR SUB - SECTION(1) OF SECTION 143 OR ON REGULAR ASSESSMENT. (B) IN ANY OTHER CASE, SUCH INTEREST SHALL BE CALCULATED AT THE RATE OF ONE - HALF PERCENT FOR EVERY MONT H OR PART OF A MONTH COMPRISED IN THE PERIOD OR PERIODS FROM THE DATE OR, AS THE CASE MAY BE, DATES OF PAYMENT OF THE TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANTED. (EMPHASIS ADDED) ITA. NO.5014/M/2014 A.Y. 2009 - 10 5 FROM A PLAIN READING OF THE ABOVE, IT BECOMES CLEAR THAT WHIL E CLAUSE (A) OF SECTION 244A(1) OF THE ACT DEALS WITH REFUNDS ARISING OUT OF TAX PAYMENTS UNDER SECTION 115WJ, TAX COLLECTION AT SOURCE U/S 206C OF THE ACT, TAX PAYMENT BY WAY OF ADVANCE TAX AND FROM TREATMENT OF TAX AS HAVINGBEEN PAID U/S 199 OF THE ACT, CLAUSE (B) OF THE SAME PROVISION DEALS WITH ALL OTHER CASES BUT FOR THOSE MENTIONED IN CLAUSE (A). WHILE THE AO IS CORRECT IN NOT GRANTING INTEREST ON REFUND OF SELF - ASSESSMENT TAX IN TERMS OF PROVISIONS OF SECTION 244A(1)(A) OF THE ACT, HE SEEMS TO HAVE B EEN NOT TAKEN INTO ACCOUNT THE PROVISIONS OF SECTION 244A(1)(B) OF THE ACT WHICH CLEARLY PROVIDE FOR SUCH REFUND. IN THIS CONTENT THE RELIANCE OF THE AR ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF STOCK HOLDING CORPORATION INDIA PVT. LIM ITED V. CIT IS SEEN TO BE QUITE APPOSITE. IN ITS EXTENSIVE ORDER THE HON'BLE BOMBAY HIGH COURT HAD HELD THAT INTEREST UNDER SECTION 244A OF THE ACT WAS VERY MUCH DUE FROM THE DATE OF PAYMENT OF SELF - ASSESSMENT TAX. THE RELEVANT PORTION OF THIS ORDER IS EXT RACTED HEREUNDER. 13. WE FIND SUPPORT FOR OUR VIEW FROM THE DECISIONS RENDERED BY KARNATAKA HIGH COURT IN CIT V. VIJAYA BANK 120111 338 ITR 489 AND DELHI HIGH COURT IN CIT V.SUTLEJ INDUSTRIES LTD. [2010] 325 ITR 331. IN BOTH CASES IN IDENTICAL CIRCUMSTANCE S IT WAS HELD THAT INTEREST IS PAYABLE FROM THE DATE OF PAYMENT OF THE TAX ON SELF - ASSESSMENT TO THE DATE OF REFUND OF THE AMOUNTS UNDER SECTION 244A OF THE ACT. 14. ACCORDINGLY, FOR ALL THE AFORESAID REASONS, WE SET ASIDE THE IMPUGNED ORDER DATED 281H SEPTEMBER 1999. WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE INTEREST PAYABLE FROM THE DATA OF PAYMENT OF SELF - ASSESSMENT TAX I.E. 31 AUGUST 1994 TILL THE DATE OF REFUND I.E. 2414 OCTOBER 1998. THE REVENUE IS DIRECTED TO COMPUTE THE INTEREST DUE TO THE P ETITIONER AND PAY THE SAME WITHIN SIX WEEKS FROM TODAY. RESPECTFULLY FOLLOWING THE AFORECITED RATIO OF THE HON BLE JURISDICTIONAL HIGH CO URT THE AO IS DIRECTED TO GRANT INTEREST U/S 244A(1)(B) OF THE ACT TO THE APPELLANT FROM THE DATE OF PAYMENT OF SELF - ASSESSMENT TAX TO THE DATE OF REFUND OF THE SAME. 5.1 COMING TO THE GROUNDS OF APPEAL, GROUND NO. 1 IS SEEN TO DEAL WITH THE NON - GRANT OF INTEREST U/S 244A OF THE ACT. AS THIS ISSUE HAS ALREADY BEEN HELD IN FAVOUR OF THE APPELLANT, GROUND NO. 1 IS ITA. NO.5014/M/2014 A.Y. 2009 - 10 6 ALL OWED. GROUND NO. 2 IS SEEN TO BE DEVOID OF ANY PRAYER FOR RELIEF. IT IS ACCORDINGLY DISMISSED. 5 . ON APPRAISAL OF THE ABOVE MENTIONED ORDER , WE NOTICE D THAT THE CLAIM IN CONNECTION WITH THE INT E REST ON REFUND HAS BEEN ALLOWED BY THE CIT(A) ON THE BASIS OF THE FINDING OF THE HONBLE HIGH COURT IN THE CASE OF STOCK HOLDING CORPORATION INDIA PVT. LTD. VS. CIT 53 TAXMANN.COM 106. THE FACTS ARE NOT DISPUTED AT THIS STAGE ALSO. N O LAW CONTRARY TO THE SAID LAW H AS BEEN PRODUCED BY THE REVENUE BEFORE US. NO MATERIAL OF ANY KIND CAME INTO NOTICE TO WHICH IT CAN BE ASSUMED BY THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE. SINCE, THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED BY THE CIT(A) ON THE BASIS OF THE FINDING OF THE HONBLE HIGH COURT IN THE CASE OF STOCK HOLDING CORPORATION INDIA PVT. LTD. VS. CIT. T HEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. 6 . IN RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22. 09. 2017 SD/ - SD/ - ( G. S. PANNU ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 22. 09. 201 7 V.P SINGH ITA. NO.5014/M/2014 A.Y. 2009 - 10 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI