HDFC BANK LTD, MUMBAI V. ASST CIT 2(3), MUMBAI

ITA 5126/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3410 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALMAN KHAN
• Keywords: Application of stay
• Section: 143(3); 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 32 MUMBAI BENCH H , MUMBAI BEFORE SHRI SANJAY GARG , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 5126 /MUM/201 4 : (A.Y : 20 1 0 - 11 ) HDFC BANK LIMITED HDFC BANK HOUSE, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI 400 013. PAN : AAACH2702H VS. ACIT - 2(3), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI YOGESH THAR REVENUE BY : SHRI SALMAN KHAN (DR) DATE OF HEARING : 2 1 / 03 /201 6 DATE OF PRONOUNCEMENT : 23 / 03 /201 6 O R D E R PER SANJAY GARG , JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT CIT(A)) DT. 8.5.2014. THE CONTROVERSY INVOLVED IN THIS APPEAL IS REGARDING THE INTERPRETATION OF T HE DIRECTIONS/ORDERS GIVEN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE ASSESSEE WHILE DECIDING THE WRIT PETITION NO. 770/2013 OF THE ASSESSEE VIDE ORDER DT. 4.4.2013. 2. THE BRIEF FACTS OF THE CASE AS BROUGHT OUT FROM THE ORDERS OF THE LOWER AUT HORITIES ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE FILED ITS E - RETURN OF INCOME ON 15.10.2010 2 HDFC BANK LTD. ITA NO. 5126/MUM/2014 DECLARING TOTAL INCOME OF RS.3986,33,64,380/ - . THE AO, HOWEVER, ASSESSED THE TOTAL INCOME OF THE ASSESSEE IN ASSESSMENT PROCEEDI NGS CARRIED OUT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT RS.7861,05,37,140/ - AND THUS COMPUTED THE TAX DEMAND AT RS.1719,65,43,130/ - . THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE SAID ADDITION. THE ASSESSEE, I N THE MEANWHILE, ALSO MOVED AN APPLICATION TO THE AO FOR STAYING RECOVERY OF THE TAX DEMAND BASED ON THE IMPUGNED ADDITION. THE AO, HOWEVER, REJECTED THE STAY APPLICATION OF THE ASSESSEE AND RECOVERED PART OF THE DEMAND BY WAY OF ADJUSTMENT OF THE REFUNDS DUE TO THE ASSESSEE IN RESPECT OF A.YS 2008 - 09 AND 2009 - 10 TOTALLING TO RS.567,87,02,900/ - . AGAINST THE ABOVE ACTION OF THE AO, THE ASSESSEE FILED A WRIT PETITION (SUPRA) BEFORE THE HON'BLE BOMBAY HIGH COURT. THE HON'BLE BOMBAY HIGH COURT VIDE ORDER DT. 4.4.2013 DIRECTED THE AO TO ADJUST THE REFUND DUE FOR THE EARLIER YEARS TOWARDS THE DEMAND FOR THE YEAR UNDER CONSIDERATION TO THE EXTENT OF RS. 60 CRORES ONLY. THE HON'BLE HIGH COURT DIRECTED THAT THE BALANCE REFUNDABLE AMOUNT IN RESPECT OF A.YS 2008 - 09 AND 2009 - 10 BE REFUNDED TOGETHER WITH INTEREST AS ADMISSIBLE IN ACCORDANCE WITH LAW TO THE ASSESSEE . THE RELEVANT FINDINGS OF THE HON'BLE HI GH COURT, FOR THE SAKE OF CONVENIENCE, ARE REPRODUCED AS UNDER : 13. CONSEQUENTLY, THE ASSESSEE HAS MADE OUT A STRONG PRIMA FACIE CASE FOR A STAY OF THE RECOVERY OF THE DEMAND IN RESPECT OF THE AFORESAID THREE ITEMS VIZ.; (I) DISALLOWANCE OF BROKEN PERIO D INTEREST; (II) DISALLOWANCE OF AMORTIZATION OF PREMIUM, AND (III) DISALLOWANCE OF EXEMPTION ON DIVIDEND INCOME FROM THE MUTUAL FUND UNITS. THE RECOVERY OF THE DEMAND ON THESE THREE HEADS HAS TO BE STAYED IN VIEW OF A STRONG PRIMA FACIE CASE BEING MADE OU T. THE BALANCE DUE AND PAYABLE BY THE ASSESSEE WOULD WORK OUT TO RS.159.49 CRORES. THE 3 HDFC BANK LTD. ITA NO. 5126/MUM/2014 ASSESSEE HAS UNDER COVER OF ITS LETTER DATED 28 MARCH 2013 PAID AN AMOUNT OF RS.100 CRORES UNDER PROTEST. 14. ON THESE FACTS AND FOR THE REASONS WE HAVE ADDUCED EARLIER , WE HOLD THAT THE ACTION OF THE DEPARTMENT IN ADJUSTING THE REFUNDS DUE TO THE ASSESSEE IN THE AMOUNT OF RS.49.56 CRORES FOR ASSESSMENT YEAR 2008 - 09 AND RS.518.30 CRORES FOR ASSESSMENT YEAR 2009 - 10 WAS CONTRARY TO LAW. TO RECAPITULATE, THE IMPUGNED ORDER ACCEPTS THE POSITION THAT THE ASSESSEE IS COVERED BY THE DECISION OF THE COMMISSIONER OF INCOME - TAX (APPEALS) AND HENCE DIRECTS THAT THE ASSESSEE SHALL NOT BE TREATED AS ASSESSEE IN DEFAULT WHILE AT THE SAME TIME MAKING AN ADJUSTMENT OF THE REFUND . 15 . IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE INTERESTS OF JUSTICE WOULD BE SERVED IF THE DEPARTMENT IS PERMITTED TO MAKE AN ADJUSTMENT TO AN EXTENT OF RS.60 CRORES. THE BALANCE WHICH IS REFUNDABLE, FOR ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 SHALL BE REFUN DED TOGETHER WITH INTEREST AS ADMISSIBLE IN ACCORDANCE WITH LAW WITHIN A PERIOD OF THREE WEEKS FROM THE DATE ON WHICH AN AUTHENTICATED COPY OF THIS ORDER IS PRODUCED ON THE RECORD. 16. RULE IS MADE ABSOLUTE IN THE AFORESAID TERMS. THERE SHALL BE NO ORDER AS TO COSTS. 3. THE AO WHILE GIVING EFFECT TO THE ORDERS OF THE HON'BLE HIGH COURT FIRST ADJUSTED RS. 60 CRORES DEMAND FOR A.Y 2010 - 11 AND THEN GRANTED THE REFUND OF THE BALANCE AMOUNT ALONGWITH INTEREST ON THE BALANCE REFUND ONLY. THE AO DID NOT REFUN D THE INTEREST DUE ON THE AMOUNT OF RS. 60 CRORES. HE HAD REFUNDED ONLY THE BALANCE AMOUNT OF RS.507,87,00,000/ - OUT OF TOTAL REFUND DUE OF RS.567,87,02,900/ - ALONGWITH INTEREST. THE CONTROVERSY INVOLVED IS AS TO WHETHER THE AO WAS SUPPOSED TO REFUND THE B ALANCE AMOUNT INCLUDING THE INTEREST ON THE AMOUNT OF RS. 60 CRORES WHICH HAS BEEN ADJUSTED AS PER THE DIRECTIONS OF THE HON'BLE HIGH COURT. 4 HDFC BANK LTD. ITA NO. 5126/MUM/2014 4. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) W HILE REFERRING TO THE PROVISIONS OF SEC. 244A OF THE ACT OBSERVED THAT AS PER THE SAID PROVISIONS, WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE, THE ASSESSEE IS ENTITLED TO RECEIVE IN ADDITION TO THE SAID AMOUNT, SIMPLE INTEREST THEREON. HE INTE RPRETED THE WORD THEREON AND HELD THAT THE WORD THEREON REFERS TO THE AMOUNT OF REFUND THAT HAS BECOME DUE TO THE ASSESSEE. HE OBSERVED THAT WHEN THE DEMAND IS ALSO OUTSTANDING AGAINST THE ASSESSEE IN ANOTHER ASSESSMENT YEAR, AND THE SAME HAS TO BE AD JUSTED PARTLY OUT OF REFUND, THE AMOUNT OF REFUND DUE SHALL AUTOMATICALLY BE THE REDUCED AMOUNT AND INTEREST SHALL HAVE TO BE GRANTED THEREON ON SUCH REDUCED AMOUNT. HE, THEREFORE, OBSERVED THAT THE AO HAD RIGHTLY NOT GRANTED INTEREST TO THE ASSESSEE ON THE ADJUSTED AMOUNT OF RS. 60 CRORES. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE HAS THUS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS. A PERUSAL OF THE OPERATING PART OF THE ORDER OF THE HON'BLE BOMBAY HIGH COURT REVEALS THAT THE HON'BLE HIGH COURT HAS OBSERVED THAT THE ASSESSEE HAD A PRIMA FACIE CASE IN RESPECT OF THREE ISSUES AND THAT THE DEMAND IN RELATION TO ADDITION MADE ON THE SAID THREE ISSUES WAS TO BE STAYED. THE HON'BLE HIGH COURT FURTHER OBSERVED THAT IN RESPECT OF THE BALANCE DUE AND PAYABLE B Y THE ASSESSEE, THE AMOUNT DUE WA S WORKED OUT AT RS.159.49 CRORES AND THAT THE ASSESSEE HAD ALREAD Y PAID AN AMOUNT OF RS. 100 CRORES OUT OF THE SAID BALANCE DUE. THE HON'BLE HIGH COURT, IN THE LIGHT OF THE ABOVE FACTS, DIRECTED THE AO TO ADJUST RS. 60 CRORES TOWARDS THE 5 HDFC BANK LTD. ITA NO. 5126/MUM/2014 BALANCE AMOUNT DUE AND DIRECTED THE AO TO REFUND THE REMAINING AMOUNT ALONGWITH IN TEREST. IN OUR VIEW, THE LOWER AUTHORITIES HAVE WRONGLY INTERPRETED THE DIRECTIONS OF THE HON'BLE HIGH COURT. THE DIRECTIONS OF THE HON'BLE HIGH COURT ARE CLEAR AND UNAMBIGUOUS. THE HON'BLE HIGH COURT HAS SPECIFICALLY OBSERVED THAT AFTER STAY OF THE DEM AND IN RELATION TO THE THREE ISSUES, THE DEMAND IN RELATION TO THE REMAINING ISSUES WERE ABOUT RS. 160 CRORES , OUT OF WHICH THE ASSESSEE HAD ALREADY PAID RS. 100 CRORES , A ND THEREFORE, DIRECTED THE AO TO ADJUST RS.60 CRORES OUT OF THE REFUNDS DUE FOR THE E ARLIER ASSESSMENT YEARS. THE ASSESSEE, THUS, IS ENTITLED TO THE REFUND OF THE BALANCE AMOUNT AND THE INTEREST AMOUNT AS IS ADMISSIBLE/PAYABLE TO HIM AS PER THE PROVISIONS OF LAW. THERE IS NO JUSTIFICATION ON THE PART OF THE AO TO WITHHOLD THE REFUND OF I NTEREST AMOUNT ON THE AMOUNT OF RS. 60 CRORES DIRECTED TO BE ADJUSTED BY THE HON'BLE HIGH COURT TOWARDS THE TAX DEMAND FOR THE YEAR UNDER CONSIDERATION. WE, THEREFORE, DIRECT THE AO TO REFUND THE ASSESSEE THE INTEREST DUE ON THE AMOUNT OF RS. 60 CRORES FR OM THE DATE IT BECOMES DUE TILL THE DATE OF ADJUSTMENT OF IT BY THE AO AT THE RATE AS ADMISSIBLE UNDER THE RELEVANT PROVISIONS. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 R D MARCH, 201 6 . SD/ - SD/ - ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SANJAY GARG ) JUDICIAL MEMBER MUMBAI, DATE : 2 3 R D MARCH, 2016 *SSL* 6 HDFC BANK LTD. ITA NO. 5126/MUM/2014 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, H BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI