BANK OF BARODA, MUMBAI V. DCIT CIR 2(1), MUMBAI

ITA 88/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9821 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Double taxation relief
• Section: 143(3); 244A; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.88/MUM/2016, (A.Y. 2006-07) BANK OF BARODA, C-26,G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 PAN: AAACB 1534F ...... APPELLANT VS. THE DCIT, CIR.2(1) AAYKAR BHAVAN,M.K.ROAD, MUMBAI-400 020 ..... RESPONDENT APPELLANTS BY : SHRI C.NARESH RESPONDENT BY : SHRI SUMAN KUMAR DATE OF HEARING : 01/01/2018 DATE OF PRONOUNCEMENT : 23/03/2018 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERT AINING TO ASSESSMENT YEAR 2006-07 IS DIRECTED AGAINST AN O RDER PASSED BY CIT(A)-4, MUMBAI DATED 12/10/2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W .S. 147 R.W.S. 250 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 12/ 03/2014. 2. THE SHORT POINT INVOLVED IN THIS APPEAL IS WITH REGARD TO DETERMINATION OF INTEREST PAYABLE TO THE ASSESSEE O N REFUNDS IN TERMS OF 2 ITA NO.88/MUM/2016, (A.Y. 2006-07) SECTION 244A OF THE ACT. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APPELLANT IS A PUBLIC SECTOR BANK, WHICH ALSO HAS F OREIGN BRANCHES AND WHOSE INCOME IS ALSO TAKEN INTO CONSIDERATION WHILE COMPUTING ASSESSEES TOTAL TAX LIABILITY. IN DETERMINING SUCH TAX LIABI LITY, CREDIT FOR THE ADVANCE TAX AND TDS PAID WITH RESPECT TO FOREIGN BRANCHES WAS ALLOWED, WHICH IS TERMED AS DIT RELIEF, AMOUNTING TO RS.31,74,14,17 4/-. AFTER ALLOWING SUCH CREDIT, THE TAX LIABILITY WAS DETERMINED AT R S.53,55,92,368/- AND AFTER REDUCING THEREFROM, THE TDS OF RS.77,58,71,27 9/- AND ADVANCE TAX OF RS.330.00 CRORES, A REFUND OF RS.354,02,78,911/- AR OSE. AS PER THE ASSESSING OFFICER INTEREST UNDER SECTION 244A OF TH E ACT WAS NOT ALLOWABLE WITH RESPECT TO THE REFUND CORRESPONDING TO THE DIT RELIEF. THIS ASPECT OF THE CONTROVERSY HAS ALSO BEEN UPHELD BY CIT(A) AGA INST WHICH THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE VEHEMENTLY POINTED OUT THAT THE INTEREST UNDER SECTION 244A OF THE ACT HAS BEEN UNJUSTLY REDUCED BY THE INCOME-TAX AUTHORITIES IN T HE IMPUGNED ASSESSMENT AND POINTED OUT THAT THE REFUND HAS ARI SEN ONLY ON ACCOUNT OF TDS AND ADVANCE TAX BEING IN EXCESS OF THE TAX LIA BILITY (NET OF DIT RELIEF) AND, THEREFORE, THERE IS NO SITUATION TO SAY THAT T HERE IS REFUND OUT OF DIT RELIEF. THE LD. REPRESENTATIVE FOR THE ASSESSEE PO INTED OUT THAT THIS CONTROVERSY IS DIRECTLY COVERED BY THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TECH. MAHINDRA LT D. [2016] 69 TAXMANN.COM 402(BOMBAY). 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE DEFENDED THE STAND OF THE LOWER AUTHORITIES BY POINTING OUT THAT DENIAL OF INTEREST IN RELATION TO THE CREDIT OF DIT RELIEF IS JUSTIFIED B ECAUSE THE GOVERNMENT OF 3 ITA NO.88/MUM/2016, (A.Y. 2006-07) INDIA IS NOT THE BENEFICIARY OF SUCH TAXES; AND, TH AT ASSESSEE WOULD BE ELIGIBLE FOR INTEREST UNDER SECTION 244A OF THE ACT ONLY ON EXCESS TAXES PAID IN INDIA. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FACTUALLY SPEAKING, IN THE INSTANT CASE, THE ASSESSMENT HAS R ESULTED INTO A REFUND AND, THEREFORE, IN PRINCIPLE, ASSESSEE IS ENTITLED TO INTEREST IN TERMS OF SECTION 244A OF THE ACT. THE ONLY CONTROVERSY IS A S TO WHETHER FOR THE PURPOSES OF COMPUTING INTEREST UNDER SECTION 244A O F THE ACT, THE EXCESS TAXES WILL BE COMPUTED AFTER CONSIDERING THE CREDIT PAID FOR DIT RELIEF OR NOT. THE CONTENTION OF THE REVENUE IS THAT THE DIT RELIEF DOES NOT REPRESENT TAXES PAID/COLLECTED IN INDIA; AND, THERE FORE, THE SAME WOULD NOT BE A PART OF THE REFUND FOR THE PURPOSES OF CAL CULATING INTEREST UNDER SECTION 244A OF THE ACT. WE FIND THAT THIS CONTROV ERSY HAS BEEN DIRECTLY ANSWERED BY THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF TECH. MAHINDRA LTD.(SUPRA), WHEREIN FOLLOWING DISCUSSION IS RELEVANT:- WE FIND THAT THE COMMISSIONER OF INCOME TAX (AP PEALS) AND THE TRIBUNAL HAVE WHILE EXAMINING THE CLAIM FOR INTEREST ON REFU ND GRANTED CONSIDERED THE FACT THAT THE RELIEF UNDER SECTION 90 OF THE ACT IS AVAILABLE IN RESPECT OF THE INCOME TAX WHICH IS PAYABLE BOTH IN INDIA AS WELL A S IN THE OTHER COUNTRIES WITH WHICH INDIA HAS DTAA. THEREFORE, RELIEF UNDER SECTI ON 90 OF THE ACT IS TO BE ALLOWED WHILE COMPUTING THE TAX LIABILITY IN INDIA BY VIRTUE OF CREDIT BEING GIVEN TO THE EXTENT THAT TAX HAS BEEN PAID ABROAD. THEREF ORE, THE TAX PAYABLE IS TO BE COMPUTED ON THE INCOME TO BE ASSESSED. THEREAFTER T HE CREDIT WHICH IS AVAILABLE TO THE ASSESSEE IN VIEW OF DTAA IS TO BE TAKEN INTO ACCOUNT AND IF THERE IS ANY EXCESS WHICH THE ASSESSEE HAS PAID INTO THE INDIAN TREASURY, THEN, HE IS ENTITLED TO THE REFUND OF THE SAME WHICH WOULD ALSO CARRY IN TEREST IN TERMS OF SECTION 244A OF THE ACT. 6. IN SO FAR AS THE ARGUMENT OF THE LD. DEPARTMENT AL REPRESENTATIVE IS CONCERNED, THE SAME HAS ALSO BEEN NOTED AND, THEREA FTER REPUDIATED BY THE HON'BLE BOMBAY HIGH COURT IN THE AFORESAID DECI SION. THEREFORE, IT HAS TO BE CONCLUDED THAT ONCE CREDIT FOR THE DIT RE LIEF IS AVAILABLE TO THE 4 ITA NO.88/MUM/2016, (A.Y. 2006-07) ASSESSEE IN TERMS OF A STATUTORY PROVISION, THE SA ME IS LIABLE TO BE TAKEN INTO CONSIDERATION FOR DETERMINING THE AMOUNT OF R EFUND, FOR THE PURPOSES OF COMPUTING INTEREST UNDER SECTION 244A O F THE ACT ALSO. THUS, ON THIS ASPECT ASSESSEE HAS TO SUCCEED. WE HOLD SO . 7. THE OTHER PLEA RAISED BEFORE US AT THE TIME OF H EARING WAS AGAINST THE VALIDITY OF THE PROCEEDINGS INITIATED BY THE AS SESSING OFFICER UNDER SECTION 147/148 OF THE ACT. SINCE ASSESSEE SUCCEED S ON MERITS OF THE DISPUTE, THE SAID ASPECT IS RENDERED ACADEMIC AND I S NOT BEING ADJUDICATED FOR THE PRESENT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2018 . SD/- SD/- (SANDEEP GOSAIN) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 23/03/2018 VM , SR. PS 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