Indian Overseas Bank, CHENNAI V. JCIT, CHENNAI

MA 141/CHNY/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5890 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-12-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-12-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 12-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R PARAMESHWARAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) M.A. NO. 141/MDS/2010 (IN INTEREST TAX APPEAL NO.6/MDS/2001) ASSESSMENT YEAR : 1996-97 M/S INDIAN OVERSEAS BANK, 763, ANNA SALAI, CHENNAI - 600 002. PAN : AAACI1223J (APPLICANT) V. THE JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE II, CHENNAI - 600 034. (RESPONDENT) APPLICANT BY: SHRI R. PARAMESHWARAN RESPONDENT BY: SHRI SHAJI P. JACOB O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS MISCELLANEOUS APPLICATION FILED BY THE ASS ESSEE, ITS GRIEVANCE IS THAT THE TRIBUNAL HELD THE INTEREST TA X APPEAL NO.6/MDS/2001 IN FAVOUR OF REVENUE BASED ON THE DEC ISION OF DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF PUNJAB NATION AL BANK V. DCIT 95 ITD 217 THAT INTEREST TAX HAD TO BE CHARGED FROM TH E GROSS AMOUNT OF INTEREST. ACCORDING TO ASSESSEE, THIS WAS WITHOUT CONSIDERING THE DECISION OF HON'BLE APEX COURT IN THE CASE OF INDIAN BANKS M.A. NO. 141/MDS/10 2 ASSOCIATION AND OTHERS V. DEVIKALA CONSULTANCY SERV ICES REPORTED IN 267 ITR 179 (SC). ASSESSEE HAS PLACED ON RECORD AN ORDER DATED 14.6.2010 OF THE JURISDICTIONAL HIGH COURT WHICH AC CORDING TO ASSESSEE, HAD GIVEN LIBERTY TO IT, TO MOVE THIS TRI BUNAL WITH PETITION UNDER SECTION 254(2) OF THE ACT. 2. ASSESSEE HAS FILED AN ADJOURNMENT PETITION STATI NG THAT THEY WERE AWAITING THE ORDER OF THE HIGH COURT. HOWEVER , WE FIND THAT THE MISCELLANEOUS APPLICATION WHICH FILED ON 12.7.2010 HAS BEEN ADJOURNED TWICE ON THE REQUEST OF THE ASSESSEE. WE DO NOT FIND PROPER REASON CITED BY THE ASSESSEE FOR GRANTING FU RTHER ADJOURNMENT. REQUEST FOR ADJOURNMENT IS THEREFORE, REJECTED. LE ARNED D.R. STRONGLY OPPOSED THE AVERMENTS CONTAINED IN THE MIS CELLANEOUS APPLICATION. 3. AS CLEARLY NOTED FROM THE MISCELLANEOUS APPLICAT ION, THE ISSUE IS REGARDING INTEREST TAX BEING LEVIED ON INTEREST TAX COLLECTED BY THE ASSESSEE FROM ITS CUSTOMERS. THIS TRIBUNAL HAD HEL D THAT INTEREST TAX HAD TO BE CHARGED ON THE GROSS AMOUNT OF INTEREST L EVIED ON THE CUSTOMERS, BASED ON THE DECISION OF DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF PUNJAB NATIONAL BANK V. DCIT (95 ITD 21 7) WHICH HAD M.A. NO. 141/MDS/10 3 REFERRED TO A DECISION OF HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT V. BANK OF MADURA LTD. (215 ITR 928) (MAD). THE CLAIM OF THE ASSESSEE BEFORE THE A.O. WAS THAT A PORTION OF INTE REST COLLECTED BY IT FROM ITS CUSTOMERS WAS FOR INTEREST TAX AND SUCH PO RTION HAD TO BE DEDUCTED FROM THE ENTIRE RECEIPT OF INTEREST BEFORE WORKING OUT INTEREST AMOUNT WHICH WAS TAXABLE UNDER THE INTEREST TAX ACT . IT IS CLEAR THAT THE INTEREST RATES BY ITSELF INCLUDED WHATEVER WAS CONSTRUED BY THE ASSESSEE AS INTEREST TAX PAYABLE BY IT. RELEVANT P ARA OF THE ORDER OF THE DELHI BENCH OF ITAT IN THE CASE OF PUNJAB NATIO NAL BANK (SUPRA) RELIED ON BY THIS TRIBUNAL IS REPRODUCED HEREUNDER: 11. A PERUSAL OF THE ABOVE CLEARLY REVEALS THAT DIF FERENT FACTS WERE INVOLVED IN THE CASE OF BANK OF MADURA LTD. (SUPRA) INASMUCH AS THE ASSESSEE BANK HAD COLLECTED INTERES T TAX FROM THE BORROWERS FOR FURTHER PAYMENT TO THE GOVERNMENT AND THE INTEREST TAX SO COLLECTED WAS CREDITED TO A SEPARAT E ACCOUNT MAINTAINED BY THE ASSESSEE. THEREAFTER THE SAID AM OUNT WAS PAID OVER TO THE GOVERNMENT AND HAVING REGARD TO AL L THESE FACTS OF THE CASE, IT WAS HELD BY THE HON'BLE MADRAS HIGH COURT THAT THIS AMOUNT COLLECTED BY THE ASSESSEE FROM THE BORR OWERS HAD NO NEXUS WITH THE AMOUNT ADVANCED BY IT AND THE SAME T HEREFORE, DID NOT FALL UNDER THE DEFINITION INTEREST AS GIV EN IN SECTION 2(7) OF THE INTEREST-TAX ACT, 1971. IN THE PRESENT CASE , THE FACTS INVOLVED ARE ALTOGETHER DIFFERENT INASMUCH AS THE A SSESSEE IS STATED TO HAVE COLLECTED THE INTEREST TAX AS A PART AND PARCEL OF INTEREST FROM THE BORROWERS AND SUCH TAX BEING INCL UDED IN THE INTEREST AMOUNT, IT IS CLAIMING TO APPLY THE MULTIP LICATION FACTOR OF 2/102 (3/103 IN ASSESSMENT YEAR 1997-98) TO WORK OUT ITS INTEREST TAX LIABILITY. HOWEVER, AS ALREADY OBSERV ED, GOING BY THE M.A. NO. 141/MDS/10 4 RATES OF INTEREST SPECIFIED BY THE ASSESSEE IN ITS RELEVANT CIRCULAR, INTEREST TAX WAS TO BE CHARGED SEPARATELY TO THE BORROWER OVER AND ABOVE THE NORMAL INTEREST RATE AN D ADJUSTMENT TO THIS EFFECT WAS DONE BY THE ASSESSEE IN ITS INTEREST RATE TO GET ITSELF REIMBURSED ON ACCOUNT O F INTEREST TAX SEPARATELY. MOREOVER, AS SPECIFICALLY CLARIFIED BY THE FINANCE MINISTER IN HIS BUDGET SPEECH (SUPRA) RELIED UPON B Y THE LD. COUNSEL FOR THE ASSESSEE, INTEREST TAX WAS TO BE LE VIED ON THE GROSS AMOUNT OF INTEREST RECEIVED BY ALL BANKS AND FINANCIAL INSTITUTIONS WHICH DEFINITELY CALLED FOR APPLICATIO N OF MULTIPLICATION FACTOR OF 2/100 (3/100 IN ASSESSMENT YEAR 1997- 98) TO THE GROSS AMOUNT OF INTEREST FOR COMPUTING I NTEREST TAX LIABILITY OF THE ASSESSEE. 4. IT WAS ON ACCOUNT OF THE REASON THAT ASSESSEE HA D LEVIED INTEREST ON ITS CUSTOMERS AT A PARTICULAR RATE, AND THEREAFTER ARGUED THAT A PART OF IT WAS MEETING INTEREST TAX LIABILIT Y, THE ORDER OF THE CIT(APPEALS) WAS SET ASIDE BY THIS TRIBUNAL AND ORD ER OF THE A.O. RESTORED. AS FOR THE DECISION OF HON'BLE APEX COURT IN THE CASE OF INDIAN BANKS ASSOCIATION AND OTHERS (SUPRA), WHICH IS STATED BY THE ASSESSEE TO HAVE BEEN NOT CONSIDERED BY THIS TRIBUN AL, HON'BLE APEX COURT WAS DEALING WITH AN ISSUE WHETHER IT WAS LAWF UL FOR A CREDIT INSTITUTION TO INCREASE RATE OF INTEREST TO THE EXT ENT THE INSTITUTION WAS LIABLE TO PAY INTEREST TAX. IT WAS A PUBLIC INTERE ST LITIGATION AND IT HAD NOTHING TO DO WITH INTERPRETATIONS RELATING TO INT EREST-TAX ACT AS SUCH AND THE ISSUE REGARDING LEVIABILITY OF INTEREST TAX , WHETHER TO BE DONE ON GROSS INTEREST OR INTEREST RECEIVED AFTER DEDUCT ING THE PART ALLEGED M.A. NO. 141/MDS/10 5 TO BE PERTAINING TO RECOVERY OF INTEREST TAX. RECO NSIDERATION OF THIS ORDER OF THIS TRIBUNAL BASED ON THIS ARGUMENT NOW R AISED BY THE ASSESSEE WOULD ONLY BE A REVIEW, FOR WHICH THIS TRI BUNAL IS HAVING NO POWER. IN THE GUISE OF MISCELLANEOUS APPLICATION, ASSESSEE IS SEEKING A REVIEW OF THE ORDER OF THIS TRIBUNAL. WE DO NOT FIND ANY MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE THIRD DAY OF DECEMBER, 2010. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEM BER CHENNAI. DATED THE 3 RD DECEMBER, 2010. KRI. COPY TO: (1) APPLICANT (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE