DDIT(IT) 3(1), MUMBAI V. GE ASSET MANAGEMENT INCORPORATED, MUMBAI

ITA 6015/MUM/2009

• Counselvise Citation: 601519914 RSA 2009
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: DEEPALI
• Keywords: Business income; Permanent establishment; Advance ruling; Revised return
• Section: 244A; 142(1)

Judgement Text

1 ITA 6015 /M/2009 M/S G E ASSET MGT. INCOPORATED A/C GENERAL ELECTRIC PENSI ONTRUST IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R.K. PANDA, A.M. ITA NO. 6015/MUM/2009 ASSESSMENT YEAR 2005-06 DDIT (IT) 3(1), SCINDIA HOUSE, R. NO. 136, IST FLOOR, N.M. ROAD, MUMBAI. VS. M/S G.E. ASSET MANAGEMENT INCORPORATED A/C GENERAL ELECTRIC PENSION TRUST, GE ASSET MANAGEMENT INC., C/O DEUTSCHE BANK OPERATIONS CUSTODY OPERATIONS DEPARTMENT PROCESS SUPERVISOR, TOWER NO. 2 ND FLOOR LOGITECH PARK, M.V. ROAD, SAKI NAKA, ANDHERI (E), MUMBAI.400072. PAN AAATG3740P APPLICANT RESPONDENT APPELLANT BY SHRI T.T. JACOB RESPONDENT BY MS. DEEPALI PANDIT ORDER PER R.K. PANDA A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)- XXXIII, MUMBAI DATED 7.08.2009 RELATING TO A.Y. 2004-05. 2. THE G ROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (APPEALS) ERRED IN HOLDING THAT THE ASS ESSEE IS ENTITLED TO INTEREST UNDER SECTION 244A ON THE AMOUNT OF SELF A SSESSMENT TAX PAID. 2 ITA 6015 /M/2009 M/S G E ASSET MGT. INCOPORATED A/C GENERAL ELECTRIC PENSI ONTRUST 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(APPE ALS) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO THE SAID I NTEREST FROM THE DATE OF PAYMENT OF SELF ASSESSMENT TAX. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSE SSING OFFICER RESTORED. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS A US PENSION TRUST ESTABLISHED FOR THE PURPOSE OF PROVIDING PAYMENT OF PENSIONS AND OTHER BENEFITS UNDER THE GE PENSION PLAN TO PARTICIPATING US EMPLOYEES OF GE COMPANY AND ITS AFFILIATES. THE ASSESSEE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE BOARD OF INDIA AS A SUB-ACC OUNT OF GE ASSET MANAGEMENT INCORPORATED AND MAKES INVESTMENTS IN IN DIA UNDER THE FOREIGN INSTITUTIONAL INVESTOR (FII) ROUTE. THE ASSESSEE H AD FILED ITS RETURN OF INCOME ON OCTOBER 27, 2004 COMPUTING ITS INCOME UNDER THE HEA D CAPITAL GAINS. THE ASSESSEE FURNISHED A REVISED RETURN OF INCOME ON JU NE 29, 2005 WHEREIN THE ASSESSEE REPORTED ITS INCOME UNDER THE HEAD BUSINE SS INCOME AND CLAIMED TREATY BENEFITS UNDER THE INDIA US TAX TREATY. T HE ASSESSEE CONTENDED THAT IN ABSENCE OF A PERMANENT ESTABLISHMENT IN INDIA, T HE BUSINESS INCOME WAS NOT TAXABLE IN INDIA. ACCORDINGLY, THE ASSESSEE RE PORTED TAXABLE INCOME AS NIL. IN APRIL 2005, THE ASSESSEE APPROACHED THE HONBLE AUTHORITY OF ADVANCE RULINGS (AAA) FOR SEEKING A RULING IN RELATION TO T HE CHARACTERIZATION OF ITS INCOME FROM SALE OF SECURITIES AND TAXABILITY OF IT S INCOME IN INDIA. THE AAR VIDE ITS RULING DATED DECEMBER 20, 2005 HELD THAT P ROFITS ARISING FROM THE SALE OF PORTFOLIO INVESTMENTS IN INDIA WILL BE TREATED A S BUSINESS INCOME. IT WAS FURTHER HELD THAT THE ASSESSEE WAS NOT A TAX RESIDE NT OF THE USA IN TERMS OF ARTICLE 4(1)(B) OF THE TREATY AND HENCE NOT ENTITLE D TO BENEFITS OF THE INDIA-USA TREATY. NOTICE U/S 142(1) OF THE ACT WAS SERVED ON THE ASSESSEE AND INFORMATION/DOCUMENTS AS CALLED FOR BY THE A.O., WE RE SUBMITTED BY THE ASSESSEE FROM TIME TO TIME. THE ASSESSMENT WAS COM PLETED VIDE ASSESSMENT ORDER DATED DECEMBER 27, 2006, AND THE ASSESSEES T OTAL INCOME WAS ASSESSED 3 ITA 6015 /M/2009 M/S G E ASSET MGT. INCOPORATED A/C GENERAL ELECTRIC PENSI ONTRUST AS BUSINESS INCOME AT ` 21,87,74,470/- WITHOUT PROVIDING TREATY BENEFITS UNDER THE INDIA-US TREATY. 2.2 THE ASSESSE PREFERRED AN APPEAL BEFORE THE CIT( A) AGAINST THE ASSESSMENT ORDER ON JANUARY 29, 2007. THE ASSESSEE ALSO FILE D A SPECIAL LEAVE PETITION BEFORE THE HONBLE SUPREME COURT IN MAY 2007 AGAINS T THE AAR RULING. THE HONBLE SUPREME COURT AFTER HEARING THE MATTER, VID E ITS ORDER DATED AUGUST 26, 2008 QUASHED THE AAR RULING. 2.3 AS REGARDS THE APPEAL FILED BEFORE CIT(A) AGAIN ST THE ASSESSMENT ORDER, AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEE, TH E CIT(A) VIDE ORDER DATED SEPTEMBER 19, 2008 HELD THAT THE AAR RULING DID NOT APPLY TO AY 2004-05. FURTHER, THE CIT(A) ALSO HELD THAT INCOME OF THE AS SESSEE SHOULD BE TAXABLE AS CAPITAL GAINS AND NOT AS BUSINESS INCOME. TO G IVE EFFECT TO THE ABOVE, THE A.O. PASSED AN ORDER ON NOVEMBER 24, 2008 AND DETER MINED THE TAX LIABILITY OF THE ASSESSEE AT ` 4,17,12,555/-. THE ASSESSEE HAD PAID ADVANCE TAX A MOUNTING TO ` 4,19,77,028/- AND SELF ASSESSMENT TAX AMOUNTING TO ` 3,71,06,783/-. ACCORDINGLY, ` 3,75,39,970/- (I.E. ` 4,33,187 OUT OF ADVANCE TAX AND ` 3,71,06,783/- OUT OF SELF ASSESSMENT TAX) WAS REFUN DABLE TO THE ASSESSEE. THE A.O. ISSUED A REFUND CHEQUE DATED FEBRUARY 5, 2009 FOR ` 3,75,39,970/- BUT DID NOT GRANT ANY INTEREST UNDER SECTION 244A OF TH E ACT. IN APPEAL, THE LD. CIT(A) DIRECTED THE A.O. TO GRANT INTEREST U/S 244A (1)(B) ON THE REFUND ARISING OUT OF SELF ASSESSMENT TAX PAID BY THE ASSESSEE. WH ILE DOING SO, HE RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. ASHOK LEYLAND LTD. (2002) 254 ITR 641 (MAD.), HOOGLY MILLS CO. LT D. DCIT, 74 ITD 309[CAL ITAT] AND MUMBAI ITAT DECISION IN THE CASE OF DCIT VS. BSES LTD., 113 TTJ 227 (MUM). 2.4 AGGRIEVED BY SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4 ITA 6015 /M/2009 M/S G E ASSET MGT. INCOPORATED A/C GENERAL ELECTRIC PENSI ONTRUST 3. WE HAVE CONSIDERED THE RIVAL SUBMISSION MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF A.O. AND THE CIT(A). WE HAVE ALSO CONSIDERED THE DECISIONS CITED BEFORE US. THE ONLY DISPUTE IN THE APPEAL IS REGARDING ALLOWABILITY OF INTEREST U/S 244A ON ACCOUNT OF SEL F ASSESSMENT TAX. WE FIND THE LD. CIT(A) WHILE HOLDING THAT INTEREST U/S 244A (1)(B) IS PAYABLE, HAS RELIED ON A COUPLE OF DECISIONS. WE FIND RECENTLY, THE HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUTLEJ INDUSTRIES LTD. [2010] 325 I TR 331 (DELHI) HAS HELD THAT WHERE SELF ASSESSMENT TAX PAID BY THE ASSESSEE U/S 140A IS REFUNDED, THE ASSESSEE SHOULD BE, ON PRINCIPLE, ENTITLED TO INTER EST THEREON SINCE THE SELF ASSESSMENT TAX FALLS WITHIN THE EXPRESSION REFUND OF ANY AMOUNT. THE LD. D.R. COULD NOT POINT OUT ANY CONTRARY DECISION. IN VIEW OF THE ABOVE AND SINCE THE ORDER OF THE LD. CIT(A) IS IN CONSONANCE WITH T HE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF ASHOK LEYLAND LTD. (SUPRA) AND HONBLE DELHI HIGH COURT IN THE CASE OF SUTLEJ INDUSTRIES LTD. ( SUPRA) AND THE DECISIONS OF CO- ORDINATE BENCHES OF THE TRIBUNAL, THEREFORE, IN ABS ENCE OF ANY CONTRARY DECISION BROUGHT TO OUR NOTICE BY THE LD. D.R., THE SAME IS UPHELD. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 31.5.2011. SD/- SD/- (D.K. AGARWAL) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST MAY, 2011. RK 5 ITA 6015 /M/2009 M/S G E ASSET MGT. INCOPORATED A/C GENERAL ELECTRIC PENSI ONTRUST COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXII, MUMBAI 4. THE DIT (INTERNATIONAL TAXATION)- MUMBAI 5. THE DR BENCH, G 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 6 ITA 6015 /M/2009 M/S G E ASSET MGT. INCOPORATED A/C GENERAL ELECTRIC PENSI ONTRUST DATE INITIALS 1 DRAFT DICTATED ON 26.5.2011, SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 26.5.2011 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER