CREDIT AGRICOLE CORPORATE &INVESTMENT BANK, V. DCIT (IT) RG 12,

MA 3/MUM/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 3867 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Assessment Year: 2001-2002
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI , , BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI SANJAY ARORA , AM . / MA NO. 03/MUM/2015 (ARISING OUT OF ITA NO. 4295/MUM/2005 ) ( / ASSESSMENT YEAR : 2001 - 02 ) CREDIT AGRICOLE INDOSUEZ (NOW CALYON BANK), 11 TH FLOOR, HOECHST HOUSE, NARIMAN POINT, MUMBAI / VS. DY. DIT(IT) - 1(2), R. NO. 117, 1 ST FLOOR, SCINDIA HOUSE, NARIMAN POINT, MUMBAI - 400 038 ./ ./ PAN/GIR NO. AAACB 3537 A ( APPLICANT ) : ( RESPONDENT ) APPLICANT BY : SHRI KETAN VED RESPONDENT BY : SHRI SUMIT KUMAR / DATE OF HEARING : 20.11.2015 / DATE OF PRONOUNCEMENT : 27 . 0 1.201 6 / O R D E R PER SANJAY ARORA, A. M.: THIS IS A MISCELLANEOUS PETITION BY THE ASSESSEE AGAINST THE ORDER U/S. 254(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BY THE TRIBUNAL DATED 0 7.8.2013 IN ITS CASE FOR ASSESSMENT YEAR (A.Y.) 2001 - 02 . VIDE THE INSTANT APPLICATION, THE ASSESSEE - APPLICANT RAISES AN OBJECTION WITH REGARD TO THE DISPOSAL OF GROUND 7 OF ITS APPEAL, READING AS UNDER, BY THE T RIBUNAL: 7. THE CIT(A) ERRED IN HOLDING THA T THE AO WAS JUSTIFIED IN NOT GRANTING A DEDUCTION OF RS.33,55,026, BEING INTEREST PAID TO HEAD 2 M A NO. 03/MUM/2015 (A.Y. 2001 - 02) CREDIT AGRICOLE INDOSUEZ VS. DY. DIT(IT) OFFICE (HO) AND BRANCHES AND COMMISSION PAID TO BRANCHES AND CORRESPONDENT, IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. YOUR APPELLANTS SUBMIT T HAT THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT HAVE NO APPLICATION IN THEIR CASE AND THE CIT(A) OUGHT TO HAVE DIRECTED THE AO TO GRANT YOUR APPELLANTS A DEDUCTION OF RS.33,55,026/ - . YOUR APPELLANTS PRAY THAT THE AO BE DIRECTED ACCORDINGLY. 2. THE SAME , IT IS SUBMITTED , STAND S DECIDED BY TH E T RIBUNAL PER PARA 15 THEREOF, ALLOWING THE ASSESSEES CLAIM IN RESPECT OF INTEREST EXPENDITURE ONLY, IGNORING THE CLAIM QUA COMMISSION EXPENDITURE, ALSO RAISED ALONG WITH IN - AS - MUCH AS THE SAME STOOD INCLUDED IN THE IMPUGNED SUM OF RS.33,55,026/ - , THE BREAK - UP OF WHICH IS AS UNDER: (IN INR) INTEREST PAID TO HO 19,61,557 INTEREST PAID TO BRANCHES 420 COMMISSION PAID TO BRANCHES 1,89,562 COMMISSION PAID TO CORRESPONDENTS 12,03,487 TOTAL 33,55,026 THE TRIBUNAL HAS COMMITTED A MISTAKE WHEN IT STATES THAT THE ASSESSING OFFICER ( A.O. ) HAS DISALLOWED A SUM OF RS.21,51,539/ - , I.E., INSTEAD THE SUM OF RS.33,55,026/ - . THE MISTAKE BEING APPARENT FROM RECORD, WAS PRAYED FOR BEING RECTIFIED; THE TRIBUNAL HAVING CLEARLY ALLOWED THE PAYMENT BY WAY OF INTEREST AND COMMISSION TO HO/OVERSEAS BRANCHES. IN THE ALTERNATIVE, IT IS SUBMITTED THAT THE IMPUGNED ORDER BE RECALLED FOR A DECISION BY THE TRIBUNAL WITH REGARD TO THE COMMISSION ALLOWED BY THE ASSESSEE TO HO/BRANCH ES. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. W E BEGIN BY REPRODUCING P ARAS 14 & 15 OF THE IMPUGNED ORDER, DECIDING THE RELEVANT GROUND, WHICH READ AS UNDER: 14. GROUND NO. 7 PERTAINS TO DISALLOWANCE OF RS. 33,55,026/ - UNDER SEC TION 40(A)(I). 3 M A NO. 03/MUM/2015 (A.Y. 2001 - 02) CREDIT AGRICOLE INDOSUEZ VS. DY. DIT(IT) 15. IN VIEW OF OUR DECISION ON GROUNDS NO. 5 AND 6, ABOVE, TAXING THE INTEREST INCOME RECEIVED FROM HO/OVERSEAS BRANCHES, THE NATURAL CONSEQUENCE IS THAT THE INTEREST PAID BY THE ASSESSEE TO ITS HO/OVERSEAS BRANCHES WOULD BECOME DEDUCTIBLE . HOWEVER, WE FIND THAT THE AMOUNT OF INTEREST DISALLOWED HAS BEEN WRONGLY TAKEN IN THIS GROUND. ON THE PERUSAL OF THE ASSESSMENT ORDER, IT WAS NOTICED THAT THE AMOUNT ACTUALLY DISALLOWED BY THE AO IS RS.21,51,539/ - AND NOT RS. 33,55,026/ - . THE AO IS THEREF ORE, DIRECTED TO GRANT DEDUCTION FOR THE COR RECT AMOUNT OF RS. 21,51,539/ - . THE ASSESSEE CLAIMS THE TRIBUNAL TO HAVE, IN DECIDING THE RELEVANT GROUND, CONTESTING THE DISALLOWANCE OF RS.33.55 LACS U/S. 40(A)(IA) , OMITTED TO CONSIDER THE CLAIM FOR COMMISSIO N, ALSO INCL UDED THEREIN. IN THIS REGARD , WITHOUT DOUBT, THE IMPUGNED SUM INCLUDES BOTH THE CLAIM FOR INTEREST AND COMMISSION, WHILE PARA 15 REFERS ONLY TO IN TEREST. THE CLAIM FOR INTEREST WORKS ONLY TO RS.19,61,977/ - , AND NOT RS.21,51,539/ - ALLOWED BY THE TRIBUNAL ; WHICH SUM IS INCLUSIVE OF RS.1,89,562/ - , BEING THE COMMISSION ALLOWED TO BRANCHES (REFER PARA 2 OF THIS ORDER) . CLEARLY, THEREFORE, IT IS INCORRECT TO SAY THAT THE TRIBUNAL HAS NOT CONSIDERED, OR HAS OMITTED TO CONSIDER, WHEN IT CONSIDERS THE AS SESSEES CLAIM FOR INTEREST PAID/ALLOWED TO HO/OVERSEAS BRANCHES, THAT PAID/ALLOWED, SIMILARLY, I.E., TO HO/OVERSEAS BRANCHES, ON ACCOUNT OF COMMISSION. THIS IS IN FACT APPARENT FROM THE REFERENCE, AT PARA 15 OF ITS ORDER, TO THE ASSESSMENT ORDER, WHEREIN , THE BREAK - UP OF THE CLAIM IS RECORDED (AT PARA 16, PAGE 17) . THAT IT DOES NOT CONSIDER, OR EXCLUDE S THE COMMISSION PAID TO CORRESPONDENTS, BEING NOT PAID/ALLOWED TO HO/BRANCHES, AS QUALIFYING FOR DEDUCTION DESPITE NON - DEDUCTION OF TAX AT SOURCE, IS ALSO APPARENT. THE REASON FOR THE SAME IS NOT FAR TO SEEK. PARA 15, AS APPARENT, IS TO BE READ IN CONJUNCTION WITH PARAS 11 TO 13, DECIDING G ROUNDS 5 AND 6, WHICH PERTAIN TO INTEREST/COMMISSION RECEIVED FROM HO/BRANCHES. THE TRIBUNAL, IN DECIDING GROUND 7, FOLL OWED ITS DECISION QUA THE SAID GROUNDS, STATING OF INTEREST/COMMISSION ALLOWED TO HO/BRANCHES AS BEING CONSEQUENTIAL TO ITS UPHOLDING THE ASSESSMENT OF INTEREST/COMMISSION RECEIVED FROM HO/BRANCHES AS INCOME . THE WORD CORRESPONDENT IS CONSPICUOUS BY ITS ABSENCE IN PARAS 11 - 13 AND, CONSEQUENTLY, 4 M A NO. 03/MUM/2015 (A.Y. 2001 - 02) CREDIT AGRICOLE INDOSUEZ VS. DY. DIT(IT) IN PARAS 14 - 15 OF ITS ORDER . THE ASSESSEE, WHO WAS CONVEYED THIS DURING HEARING, IS IN FACT CONSCIOUS OF THIS FACT (REFER PARAS 7 AND 8 OF ITS INSTANT APPLICATION), YET INSISTS ON A MISTAKE AT THE END OF THE TRIB UNAL IN - AS - MUCH AS THE ASSESSEES RELEVANT GD. (# 7) SPECIFICALLY STATES, QUA COMMISSION, AS PAID TO BRANCHE S AND CORRESPONDENTS. TRUE, HOWEVER, THE GROUND ONLY STATES THE ASSESSEES GRIEVANCE. THE SAME, HOWEVER, STANDS TO BE DECIDED ON THE BASIS OF THE PL EADINGS BY THE PARTIES BEFORE THE APPELLATE AUTHORITY. A HARMONIOUS READING OF THE IMPUGNED ORDER CLEARLY SHOWS THAT IT HAS ACCEPTED THE ASSESSEES IMPUGNED CLAIM, CONSISTENT WITH ITS DECISION IN RELATION TO GROUNDS 5 AND 6 (REPRODUCED ABOVE), TO THE EXTEN T IT RELATES TO COMMISSION ALLOWED TO HO/BRANCHES. IN SO DOING, IT FOLLOWS THE CO - ORDINATE BENCH (IN ITA NO. 6615/MUM/2003) IN THE ASSESSEES OWN CASE AS WELL AS IN SUMITOMO MITSUI BANKING CORPN. VS. DY. DIT(IT) [2012] 136 ITD 66 (MUM)(SB) . REFERENCE IN TH IS CONTEXT MAY ALSO BE MADE TO PARA 25 OF THE TRIBUNALS ORDER, QUOTING THE RELEVANT OBSERVATIONS BY THE LARGER BENCH, WHEREIN, AGAIN, THERE IS NO REFERENCE TO THE CORRESPONDENTS BUT ONLY TO HO/OVERSEAS BRANCHES. IN FACT, THERE IS NOTHING ON RECORD TO SUGG EST THAT THE SAID ORDERS ALSO CONSIDER THE CLAIM OF INTEREST/COMMISSION ALLOWED TO CORRESPONDENTS, TREATING IT AT PAR WITH HO/BRANCHES, IN WHICH CASE THERE IS COMPLETE IDENTITY, EXCEPT, PERHAPS, A DIFFERENCE IN THE TAXING JURISDICTION. IN FACT, AS EXPLAINE D HERE - IN - BEFORE, AS ALSO APPARENT FROM A READING OF GROUNDS 5 AND 6, THE INTEREST/COMMISSION RECEIVED FROM HO/BRANCHES, BEING FROM SELF, WAS PLEADED FOR BEING IGNORED IN COMPUTING THE INCOME ASSESSABLE TO TAX. THE SAME WAS NOT ACCEPTED BY THE TRIBUNAL (RE FER PARAS 11 - 13 OF THE IMPUGNED ORDER), ALLOWING, CONSEQUENTLY, THE ASSESSEES CLAIM FOR INTEREST/COMMISSION PAID TO SELF, I.E., HO/BRANCHES. THE TRIBUNAL IS CONSCIOUS OF ITS DECISION, I.E., FOR EXCLUDING, IN ACCEPTING THE ASSESSEES CASE IN RESPECT OF INT EREST/COMMISSION ALLOWED TO SELF (HO/BRANCHES), THAT ALLOWED TO THE CORRESPONDENTS. THAT NEVERTHELESS CAN BY NO MEANS BE CONSTRUED AS A MISTAKE ON ITS PART. THE ASSESSEES CLAIM ACCORDINGLY CANNOT BE COUNTENANCED. 5 M A NO. 03/MUM/2015 (A.Y. 2001 - 02) CREDIT AGRICOLE INDOSUEZ VS. DY. DIT(IT) AT THE SAME TIME, HOWEVER, WE FIND SOME MERIT IN THE ASSESSEES CLAIM THAT THE TRIBUNAL, EVEN IF IT DOES NOT CONSIDER THE CLAIM FOR COMMISSION TO CORRESPONDENTS AS AT PAR WITH THAT ALLOWED TO HO/BRANCHES, SHOULD STATE ITS REASON / S FOR UPHOLDING THE DISALLOWANCE, I.E., ADJUDICATE THE SAME. THER E IS NO POSITIVE OR CLEAR FINDING IN THE MATTER , INFORMING AS TO WHY IT CONSIDER S THE ASSESSEES CLAIM AS EX IGIBLE FOR DISALLOWANCE U/S. 40(A)(IA). THE CLAIM CANNOT SIMPLY BE BRUSHED ASIDE, EVEN IF, AS APPARENT, IT HA S NOT BEEN CONSIDERED AS PAYMENT TO SEL F. THE ORDER SHOULD EXPLICITLY STATE AS TO WHY THE CLAIM DOES NOT QUALIFY FOR DEDUCTION, STATING ITS REASON / S, EVEN IF, AS IT APPEARS, IT IS FOR THE REASON OF NON - DEDUCTION OF TAX AT SOURCE , WHICH IS ADMITTED . TO THIS EXTENT, WE FIND THE ASSESSEES CLAIM F OR NON - ADJUDICATION AS VALID. THE IMPUGNED ORDER IS, ACCORDINGLY, RECALLED FOR ADJUDICATING THE ASSESSEES GROUND N O. 7 IN - SO - FAR AS IT RELATES TO THE ASSESSEES CLAIM TOWARD COMMISSION PAID/ALLOWED TO CORRESPONDENTS, I.E., FOR RS.12,03,487/ - . WE MAY, IT M AY BE EMPHASIZE D , NOT BE CONSTRUED AS HAVING ISSUED ANY OPINION IN THE MATTER; THE HEARING BEFORE US BEING LIMITED TO THE MISTAKE ATTENDING THE IMPUGNED ORDER. BEFORE PARTING, WE MAY ADD THAT THERE HAS BEEN CLEARLY ALSO AN OMISSION TO INCLUDE THE WORD COMMISSION ALONG WITH THE WORD INTEREST AT PARA 15 OF THE IMPUGNED ORDER, SO THAT THE WORD INTEREST THEREIN WOULD REQUIRE BEING READ AS INTEREST/COMMISSION. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPLICATION IS ALLOWED ON T HE AFORE - SAID TERMS. RESULT PRONOUNCED IN THE OPEN COURT ON NOVEMBER 22, 2015 AT THE CONCLUSION OF THE HEARING. SD/ - SD/ - ( SHAILENDER KUMAR YADAV ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 27 . 0 1 .201 6 . . ./ ROSHANI , SR. PS 6 M A NO. 03/MUM/2015 (A.Y. 2001 - 02) CREDIT AGRICOLE INDOSUEZ VS. DY. DIT(IT) / COPY OF THE ORDER FORWARDED TO : 1. / THE APP LIC ANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI