ABU-DHABI COMMERCIAL BANK LTD, MUMBAI V. ADIT (IT)1(1), MUMBAI

ITA 5136/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1200 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1990-1991
• Appeal Filed On: 09-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR HARGOVIND SI NGH
• Assessee Lawyers: A V SONDE
• Section: 244A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A, MUMBAI BEFORE SHRI S V MEHROTRA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) ABU-DHABI COMMERCIAL BANK LTD., 75B REHMAT MANZIL, VEER NARIMAN ROAD, MUMBAI-400020 PAN:AAACA4216B .APPELLANT VS DCIT (INTERNATIONAL TAXATION)-1(1), SCINDIA HOUSE, NAROTTAM MORARJEE MARG BALLARD ESTATE MUMBAI-400038 RESPONDENT ASSESSEE BY : SHRI A V SONDE REVENUE BY : DR.HARGOVIND SI NGH O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 03.07.2009 OF CIT(A)-XXXI, MUMBAI FOR THE ASSESSMENT YEAR 1990-91 2. THE ONLY ISSUE RAISED BEFORE US IN THIS APPEAL I S WHETHER THE CIT(A) IS JUSTIFIED IN UPHOLDING THE METHOD ADOPTED BY THE AO FOR CALCULATING THE INTEREST U/ S 244A OF THE ACT BY REDUCING THE REFUND INCLUSION OF THE IN TEREST ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) 2 ALREADY GRANTED FROM THE TAX REFUND TO THE ASSESSE E AND COMPUTED THE INTEREST AT THE REMAINING AMOUNT. 3. THE ASSESSEE WAS AGGRIEVED BY THE METHOD OF CALCULATION OF INTEREST ON THE REFUND U/S 244A. TH E MAIN GRIEVANCE OF THE ASSESSEE WAS THAT THE INTEREST U/ S 244A HAS TO BE CALCULATED ON THE TAX REFUND WITHOUT RED UCING THE INTEREST GRANTED EARLIER ON REFUND. THE ASSESSEE FILED A RECTIFICATION APPLICATION U/S 154 WHEREIN INTER AL IA RAISED THIS ISSUE OF CALCULATION OF INTEREST ON THE TAX REFUND BY REDUCING THE REFUND TAX AND NOT INTEREST ALREADY GRANTED. TH E ASSESSEE SUBMITTED BEFORE THE AO THAT THE INTEREST PART ALREADY GRANTED SHOULD NOT BE REDUCED FROM THE TAX REFUND DUE AND INTEREST WOULD BE PAID ON THE BALANCE REFU ND. THE AO, VIDE ORDER DATED 26.08.2008 PASSED UNDER SECTIO N,154 WAS OF THE VIEW THAT THERE IS NO MISTAKE IN CALCULA TION OF INTEREST ON REFUND U/S 244A. 4. THE CIT(A) ALSO HELD THAT THE METHOD ADOPTED BY THE AO IS AS PER THE PROVISIONS OF ACT AND CANNOT BE FA ULTED WITH, THEREFORE, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE VIDE IMPUGNED ORDER. 5. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT WHILE CALCULATING THE INTEREST BY THE AO U/S 244A, THE REFUND INCLUDED THE INTEREST ALREADY GRAN TED HAS ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) 3 BEEN REDUCED FROM THE REFUND DUE TO THE ASSESSEE AN D ON THE REMAINING AMOUNT INTEREST HAS BEEN CALCULATED. THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE INTEREST ON THE REFUND DUE TO THE ASSESSEE SHOULD HAVE BEEN CALCULATED ONLY AFTER REDUCING THE REFUND OF TAX AN D NOT THE REFUND OF INTEREST ALREADY GRANTED. THUS, THE LD. AR OF THE ASSESSEE HAS REFERRED THE INTEREST CALCULATED BY TH E AO AT RS.31,29,172/- WHEREIN THE AO HAS REDUCED THE AMOU NT OF REFUND INCLUDED THE INTEREST U/S 244A ALREADY GRANT ED FROM THE REFUND DUE TO THE ASSESSEE AND THEN THE INTERES T WAS CALCULATED. HE HAS REFERRED THE CALCULATION OF IN TEREST IN ASSESSEES OWN WORKING AND SUBMITTED THAT IF THE IN TEREST IS CALCULATED ON THE TAX REFUND EXCLUDING THE INTEREST ALREADY GRANTED, THE ASSESSEE IS ENTITLED FOR FURTHER REF UND OF RS.11,89,050/- BEING THE DIFFERENCE OF ACTUAL INTER EST OF RS.43,18,221/- AND RS.31,29,171/- BEING CALCULATED BY THE AO. HE HAS ALSO REFERRED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE CIT(A) HAS DECIDED THE ISSUE ONL Y ON THE GROUND THAT THE METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY FOLLOWED IN RESPECT OF ALL ASSESSEES CASES. THEREFORE, THE CIT(A) WITHOUT GIVING ANY REASON AND ANALYZING THE ISSUE IS DECIDED THE ISSUE HAS ONLY ON THE GROUND THAT THE AO IS CONSISTENTLY FOLLOWING THIS METHOD. HE HAS CONTENDED THAT THE CIT(A) HAS NOT GONE INTO THE CORRECTNESS OF THE METHOD ADOPTED BY THE AO BUT HA S ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) 4 CONSIDERED THE CONSISTENT METHOD ADOPTED BY THE AO . THE ASSESSEE ALSO FILED A COPY OF THE DETAILS OF WORKI NG OF INTEREST ON REFUND FILED BEFORE THE CIT(A) IN SUPPO RT OF ITS CONTENTION. 6. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE INTEREST U/S 244A IS CALCULATED ON THE FINAL DE TERMINATION OF THE REFUND AND WHATEVER REFUND HAS ALREADY GRANT ED AND PAID TO THE ASSESSEE ARE REQUIRED TO BE REDUCED FRO M THE REFUND DUE TO THE ASSESSEES. HE HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. IT IS EVIDENT FROM THE ORDERS OF THE LOWE R AUTHORITIES THAT THE AO HAS CALCULATED THE INTEREST U/S 244A BY REDUCING THE REFUND OF TAX ALREADY GRANTED TO THE A SSESSEE. IN THE AMOUNT OF REFUND THE INTEREST WHICH WAS GRAN TED EARLIER OCCASIONS ALSO INCLUDED. THEREFORE, THE AO HAS REDUCED THE TOTAL REFUND GRANTED WHICH CONSISTS RE FUND OF TAX AND INTEREST ALREADY GRANTED U/S 244A. THEREFORE , WE FIND FORCE IN THE CONTENTION OF THE LEARNED AR THAT WHI LE COMPUTING THE INTEREST U/S 244A, THE AO HAS REDUCED BOTH THE REFUND OF TAX AS WELL INTEREST GRANTED U/S 244A FROM THE REFUND DUE TO THE ASSESSEES. IN ORDER TO COMPUTE THE INTEREST U/S 244A, THE AMOUNT OF BALANCE REFUND DU E TO THE ASSESSEE HAS TO BE DETERMINED AFTER DEDUCTING THE AMOUNT ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) 5 OF TAX ALREADY REFUNDED AND NOT AMOUNT OF INTERES T ALREADY GRANTED U/S 244A. THUS THE INTEREST COMPONENT IN T HE REFUND ALREADY GRANTED SHOULD BE EXCLUDED WHILE THE SAME I S TO BE REDUCED FROM THE REFUND DUE TO THE ASSESSEE FOR THE PURPOSES OF SECTION 244A FOR FUTURE INTEREST ON TH E BALANCE REFUND DUE AMOUNT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE METHOD ADOPTED BY THE AO SUFFERED FROM GRAVE ERROR AS THE SAME HAS RESULTED THE REDUCTION OF INTEREST PAYAB LE TO THE ASSESSEE BECAUSE THE PRINCIPAL AMOUNT IS REDUCED BY INTEREST COMPONENT ALREADY GRANTED AND THEN FUTURE INTEREST IS COMPUTED. THE INTEREST ALREADY GRANTED UP TO A D ATE IS RELEVANT ONLY FOR EXCLUSION OF PERIOD FOR WHICH IT IS GRANTED AND THE FUTURE INTEREST HAS TO BE GRANTED FROM THE SUBSEQUENT PERIOD. THEREFORE, THE INTEREST ALREADY GRANTED CANNOT REDUCE THE PRINCIPLE REFUND DUE TO THE ASSES SEE BUT THE AMOUNT WHICH REPRESENTS THE TAX ALREADY REFUND ED HAS TO BE REDUCED FROM THE TOTAL REFUND DOE TO THE ASS ESSEE FOR COMPUTATION OF INTEREST U/S 244A. WE NOTE THAT THE CIT(A) HAS DECIDED THE ISSUE IN PARA 2.2 OF THE IMPUGNED ORDER AS UNDER : 2.2 I HAVE CONSIDERED THE APPELLANTS REQUEST AND EXAMINED THE FACTS. IN VIEW OF THE FACTS ABOVE, I FIND THAT THE ISSUE RELATES TO CALCULATION METHOD ADOPTED BY THE DEPARTMENT AND ASSESSEE. IT IS SEEN THAT METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY FOLLOWED IN RESPECT OF ALL ASSESSEES THEREFORE, I AM OF THE VIEW THAT METHOD ADOPTED BY THE AO AS PER PROVISOS OF THE ACT CANNOT BE FAULTED. I THEREFORE, INCLINED TO AGREE WITH THE ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) 6 COMPUTATION METHOD ADOPTED BY THE AO. ACCORDINGLY, THE GROUND UNDER APPEAL IS DISMISSED 8. FROM THE ABOVE IT IS CLEAR THAT THE CIT(A) HAS NOT GONE INTO THE QUESTION OF CORRECTNESS OF METHOD ADO PTED BY THE AO BUT DECIDED THE ISSUE ON THE GROUND THAT THE METHOD ADOPTED BY THE AO IS BEING CONSISTENTLY FOLLOWED I N RESPECT OF ALL ASSESSEES. THEREFORE, THE IMPUGNED ORDER O F THE CIT(A) QUA THIS ISSUE IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE SET ASIDE. WE ACCORDINGLY DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO CALCULATE THE INT EREST ON THE REFUND DUE TO THE ASSESSEE WITHOUT REDUCING TH E INTEREST UNDER SECTION 244A WHICH IS PART OF THE REFUND EARL IER GRANTED FROM THE REFUND DUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 02.07.2010 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 2 ND JULY 2010 SRL:28610 COPY TO: 1. ABU-DHABI COMMERCIAL BANK LTD., 75B REHMAT MANZIL, VEER NARIMAN ROAD, ITA NO. 5136/MUM/2009 (ASSESSMENT YEAR: 1990-91) 7 MUMBAI-400020 2.DCIT (INTERNATIONAL TAXATION)-1(1), SCINDIA HOUSE, NAROTTAM MORARJEE MARG BALLARD ESTATE MUMBAI-400038 3. DIT (INTERNATIONAL TAXATION), MUMBAI 4. ADIT-(INTERNATIONAL TAXATION)-RANGE-1, MUMBAI 5. CIT(A)-XXXI, MUMBAI 6. DR A BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI