DDIT (IT) 1(2), MUMBAI V. RELIANCE INDUSTRIES LTD, MUMBAI

ITA 6985/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9196 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 14-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RUPINDER BRAR
• Assessee Lawyers: RAJESH LAKHARA
• Keywords: Non compliance
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI D. MANMOHAN, V. P. AND SHRI SANJAY AROR A, A.M. ITA NO. : 6985/MUM/2011 ASSESSMENT YEAR: 2003-04 ASSTT. DIRECTOR OF INCOME TAX (IT)- 1(2), 119, SCINDIA HOUSE, BALLARD PIER, MUMBAI-400 038 VS. M/S. RELIANCE INDUSTRIES LTD. AS AGENT OF D.B. SERVICES TENNESSEE INC., MAKER CHAMBERS IV, 3 RD FLOOR, 222, NARIMAN POINT, MUMBAI-400 021 [PAN NO: AAACR 5055 K] (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. RUPINDER BRAR RESPONDENT BY : SHRI FARROKH V. IRANI & SHRI RAJESH LAKHARA DATE OF HEARING : 11.12.2012 DATE OF PRONOUNCEMENT : 26 .12.2012 ORDER PER SANJAY ARORA, A.M.: THIS IS AN APPEAL BY THE REVENUE ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)10, MUMBAI (CIT(A) FOR SHORT ) DATED 20.07.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.144 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSES SMENT YEAR (AY) 2003-04 VIDE ORDER DATED 29.12.2009. 2.1 OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED BY THE LD. AR, ITS COUNSEL, THAT THE ASSESSEE-COMPANY IN T HE INSTANT CASE, RELIANCE INDUSTRIES LTD. (RIL), FILED A RETURN AS AN AGENT OF D. B. SERVICES TENNESSEE INC., FROM WHOM IT HAD ITA NO: 6985/MUM/2011 (AY 2003-04) M/S.R ELIANCE INDUSTRIES LTD. AS AGENT OF D.B. SERVICES TENNESSEE INC. 2 AVAILED FOREIGN COMMERCIAL BORROWINGS, WHICH HAD BE EN CONTINUING FROM THE PAST. THE CORRESPONDING LOAN AGREEMENT, BEING IN RESPECT OF B ORROWING IN FOREIGN CURRENCY FROM A SOURCE OUTSIDE INDIA, STOOD APPROVED BY THE CENTRAL GOVERNMENT PRIOR TO 01.06.2001, SO THAT THE PROVISION OF SECTION 10(15)(IV)(F) STOOD A TTRACTED, EXEMPTING THE INCOME THEREON. AS SUCH, THE INTEREST INCOME THEREON, THOUGH ARISIN G OR ACCRUING IN INDIA, WOULD YET NOT BE TAXABLE IN THE HANDS OF THE ASSESSEE-FOREIGN LEN DER. AS A CONDITION OF APPROVAL BY THE CENTRAL GOVERNMENT, THE AMOUNTS HAD TO BE UTILISED FOR SPECIFIC PURPOSE/S. THE AMOUNT HAVING ALLEGEDLY NOT BEEN SO UTILISED BY THE BORROW ER, THE SAID APPROVAL STOOD WITHDRAWN VIDE ORDER DATED 05.02.2002 BY THE DEPARTMENT OF EC ONOMIC AFFAIRS, MINISTRY OF FINANCE, GOVERNMENT OF INDIA. THE QUESTION, THUS, ARISES IS WHETHER; THE APPROVAL HAVING BEEN WITHDRAWN DUE TO NON COMPLIANCE OF A CONDITION OF APPROVAL BY THE BORROWER, COULD THE LENDER BE PENALISED, THEREBY, BY MAKING HIS INC OME, WHICH WAS LENT UNDER THE CONDITION OF INCOME BEING EXEMPT FROM TAX UNDER CHA PTER III OF THE ACT, NOW TAXABLE? THE MATTER IS NOT RES INTEGRA , AT LEAST AS FAR AS THE TRIBUNAL IS CONCERNED, AND STANDS DECIDED BY IT IN NO LESS THAN SEVEN CASES, COPIES O F WHICH STAND FURNISHED IN THE ASSESSEES PAPER-BOOK, BEING IN RESPECT OF DIFFEREN T LENDERS FROM THE RIL AS A BORROWER AVAILED ECBS, AND WHOM IT REPRESENTS AS AN AGENT U/ S. 163. HE WOULD THEN TAKE US TO SOME OF THE SAID ORDERS, PARTICULARLY THE GROUNDS O F APPEAL THEREIN, SHOWING THEM TO BE THE SAME AS THOSE RAISED BY THE REVENUE IN THE INST ANT CASE. THE LEAD ORDER, HE FURTHER CONTINUED, WAS IN THE CASE OF RELIANCE INDUSTRIES LTD. VS. DDIT (IT) 2(1) , MUMBAI (IN ITA NO. 516/MUM/2002 DATED 08.02.2005), WHICH DEALS WITH THE MATTER EXTENSIVELY, PLACED AT PAGES 1 TO 36 OF THE ASSESSEES PAPER-BOO K. LIKE WISE IN THE CASE OF THE PRESENT ASSESSEE, PER ORDER IN ITA NO. 4595/MUM.2010 DATED 08/6/2012 (PB PGS. 154-175). THE ISSUE ARISING IN THE INSTANT APPEAL IS THUS SQUAREL Y COVERED BY A SERIES OF DECISIONS BY THE TRIBUNAL. IT IS THIS THAT PREVAILED WITH THE LD. C IT(A), FURTHER OBSERVING THAT THE ORDER BY A HIGHER FORUM, TRIBUNAL IN THE INSTANT CASE, IS BIND ING ON THE AUTHORITIES BELOW, PLACING RELIANCE ON THE DECISIONS IN THE CASE OF DUNLOP INDIA LTD. & ORS. (1985) 154 ITR 172 (SC) AND BANK OF BARODA VS. H. C. SRIVASTAVA (2002) 256 ITR 385 (BOM.). ITA NO: 6985/MUM/2011 (AY 2003-04) M/S.R ELIANCE INDUSTRIES LTD. AS AGENT OF D.B. SERVICES TENNESSEE INC. 3 2.2 THE LD. DR, IN REJOINDER, APART FROM MAINTA INING HIS RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW, AS HE DID AT THE START OF THE AR GUMENTS, COULD NOT EITHER DISTINGUISH THE SEVERAL DECISIONS BEING RELIED UPON BY THE ASSESSEE -RESPONDENT, NOR DID HE BRING ANY ORDER BY A HIGHER AUTHORITY IN CONFLICT WITH THE CO NSISTENT VIEW OF THE TRIBUNAL, INCLUDING IN THE ASSESSEES OWN CASE, TO OUR NOTICE. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD, INCLUDING THE CASE LAW CITED BY THE ASSESSEE. THE REVENUE HAS NOT BEE N ABLE TO MAKE OUT ANY CASE, DISTINGUISHING THE FACTS AND CIRCUMSTANCES FOR THE CURRENT YEAR FROM THAT OBTAINING IN ITS CASE FROM THAT DECIDED BY THE TRIBUNAL PER A SERIES OF A DECISIONS, WHICH WE OBSERVE TO BE IN THE NAME OF THE ASSESSEE-APPELLANT, RELIANCE INDUSTRIES LTD (SUPRA), ALBEIT IN ITS CAPACITY AS AN AGENT FOR DIFFERENT PRINCIPAL LENDER S. NO DECISION BY A HIGHER COURT OR APPELLATE FORUM, TAKING A DIFFERENT VIEW IN THE MAT TER, HAS ALSO BEEN BROUGHT TO OUR NOTICE BY THE REVENUE. UNDER THE CIRCUMSTANCES, THE MATTER CAN ONLY BE REGARDED AS FULLY COVERED BY THE TRIBUNALS ORDERS IN, AMONG OTHERS, THE ASSESSES OWN CASE, AS WELL AS IN LIKE CASES. WE SEE NO REASON TO ANY DIFFERENT VIEW OF THE MATTER. THE IMPUGNED ORDER IS ACCORDINGLY CONFIRMED. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED ON THIS 26 TH DAY OF DECEMBER, 2012 SD/- SD/- ( D. MANMOHAN ) ( SANJAY ARORA ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATE: 26 /12/2012 ITA NO: 6985/MUM/2011 (AY 2003-04) M/S.R ELIANCE INDUSTRIES LTD. AS AGENT OF D.B. SERVICES TENNESSEE INC. 4 COPY FORWARDED TO: 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C.I.T. 4. CIT (A) 5. THE DR D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI