Income Tax Appellate Tribunal - Mumbai
Bank Of Bahrain & Kuwait Bsc, Mumbai vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'L-1' MUMBAI
BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM)
ITA Nos. 1034, 1035 & 1036/Mum/2008
Assessment years-2001-02 & 2002-03
The ADIT(I.T.) 3(2), Bank of Bahrain & Kuwait BSC,
Scindia House, Jolley Maker Chambers II,
N.M. Road, 225, Nariman Point,
Mumbai -400 038 Vs. Mumbai-400 021
PAN AAACB2140F
(Appellant) (Respondent)
C.O. No. 94/Mum/2008
(Arising out of ITA No. 1035 /Mum/2008
Assessment year- 2002-03
Bank of Bahrain & Kuwait BSC, The ADIT(I.T.) 3(2),
Jolley Maker Chambers II, Scindia House,
225, Nariman Point, N.M. Road,
Mumbai-400 021 Vs. Mumbai -400 038
PAN AAACB2140F
(Appellant) (Respondent)
Appellant by: Shri Balkrishna
Respondent by: Shri K.K. Ved
ORDER
PER BENCH These three appeals are filed by the Revenue and the Cross Objection is filed by the assessee. The appeals are directed against the orders dt. 30.11.2007 passed by the Ld. CIT(A)-XXXIII, Mumbai for the assessment years 2001-02 and 2002-03. Since issues are common in these appeals, these were heard together and are being disposed of through this consolidated order.
2 Bank of Behrain ITA No. 1034/Mum/2008- A.Y. 2001-02
2. The Ld. CIT(A) has passed the order dt. 30.11.2007 on the appeal which has been instituted against the order passed u/s. 154 of the IT Act 1961 dt. 19.1.2007 for the A.Y. 2001-02.
3. Aggrieved, assessee preferred an appeal before the Ld. CIT(A).
4. Before the Ld. CIT(A) the assessee submitted that the refund u/s. 143(1) was granted to the assessee on 28.2.2003 on which date the provisions of Sec. 234D had not come on the statute. Section 234D was inserted by the Finance Act, 2003 w.e.f. 1.6.2003. Hence they are not liable to pay interest u/s. 234D. The assessee placed reliance on the decisions of Glaxo Smithkline Asia (P) Ltd. Vs ACIT - 97 TTJ 108 (Del), Cybertech Systems & Software Ltd. Vs ACIT, 7 SOT 230 (Mum) and Van Oord Dredging & Marine Contractors Bv Vs DDIT 105 ITD 97 (Mum). The assessee submitted that interest u/s. 234 cannot be charged in this case.
5. The Ld. CIT(A) held as follows:
"In this case, the return was processed u/s. 143(1) and the refund was issued on 28.2.2003 i.e. prior to Sec. 234D coming into force. Respectfully following the Hon'ble ITAT decision in the case of Glaxo Smithkline Asia (P) Ltd Vs ACIT 97 TTJ 108, the AO is directed not to charge interest u/s. 234D of the I.T. Act, 1961 if the refund was issued to the assessee before 1.6.2003."
6. Aggrieved, Revenue is in appeal before us.
7. The Ld. Departmental Representative Shri Balkrishna placed the order of the Kerala High Court in the case of CIT Vs Kerala Chemicals & Proteins Ltd., wherein the question involved was as follows:
3 Bank of Behrain "Whether the Tribunal was justified in holding that the assessee is not liable to pay interest u/s. 234D on excess refund granted while sending intimation u/s. 143(1) of the Act for the assessment year 1999-2000."
8. The High Court held as follows:
"However, we vacate the finding of the Tribunal that Sec. 234D is applicable only from the A.Y. 2004-05 onwards. The view taken by the A.O that Sec. applies from 1.6.2003 is the correct position."
9. The Ld. Counsel for the assessee Shri K.K. Ved relied on the judgement of the Bombay High Court in the case of CIT Vs Bajaj Hindustan Ltd., wherein the question involved was as follows:
"Whether in the facts and circumstances of the case and in law the ITAT was right in holding that the interest u/s. 234D cannot be charged in respect of refunds granted prior to 1.6.2003?"
10. In this regard the Bombay High Court held as follows:
"So far as the last question is concerned, it is seen that the subject provision came on statute book w.e.f. 1.6.2003. If that be so, the said provision does not have retrospective effect. In this view of the matter, we do not see appeal giving rise to any substantial question of law. Appeal is, therefore, dismissed in limini with no order as to costs."
11. We find that the issue before us is squarely covered by the decision of the Bombay High Court in the case of CIT Vs Bajaj Hindustan Ltd., (supra).
12. The Kerala High Court decision in the case of CIT Vs Kerala Chemicals & Proteins Ltd. (supra) relied on by the Ld. Departmental Representative is not appropriate to the present issue. Respectfully 4 Bank of Behrain following the decision of the Jurisdictional High Court in the case of CIT Vs Bajaj Hindustan Ltd., we dismiss the Revenue's appeal.
ITA No. 1035/Mum/2008- A.Y. 2001-0213. The Ld. CIT(A) has passed the order dt. 30.11.2007 on the appeal which has been instituted against the order passed u/s. 250 of the IT Act 1961 dt. 8.2.2007 for the A.Y. 2002-03.
14. Aggrieved, assessee preferred an appeal before the Ld. CIT(A)
15. Before the Ld. CIT(A), the Ld. AR of the assessee reiterated the submission similar to that at para 4 in ITA No. 1034/M/08.
16. The Ld. CIT(A) held as follows:
"In this case, the return was processed u/s. 143(1) and the refund was issued on 20.2.2003 i.e. prior to 1.6.2003 i.e. prior to Sec. 234D coming into force. Respectfully following the Hon'ble ITAT decision in the case of Glaxo Smithkline Asia (P) Ltd Vs ACIT 97 TTJ 108, the AO is directed not to charge interest u/s. 234D of the I.T. Act, 1961 if the refund was issued to the assessee before 1.6.2003."
17. Since the issue in ITA No. 1034/M/08 and in the present appeal i.e. 1035/M/08 is identical, Paras 6 to 12 in ITA 1034/M/08 has to be followed. Therefore, the Revenue's appeal in ITA No. 1035/M/08 is dismissed.
ITA No. 1036/Mum/2008- A.Y. 2001-0218. The appeal has been instituted against the order passed u/s. 154 of the I.T. Act, 1961 dt. 3.5.2007 for the A.Y. 2002-03.
5 Bank of Behrain
19. Aggrieved, assessee preferred and appeal before the Ld. CIT(A).
20. Before the Ld. CIT(A), the Ld. AR of the assessee reiterated the submission similar to that at para 4 in ITA No. 1034/M/08.
21. The Ld. CIT(A) held as follows:
"In this case, the return was processed u/s. 143(1) and the refund was issued on 20.2.2003 i.e. prior to 1.6.2003 i.e. prior to Sec. 234D coming into force. Respectfully following the Hon'ble ITAT decision in the case of Glaxo Smithkline Asia (P) Ltd Vs ACIT 97 TTJ 108, the AO is directed not to charge interest u/s. 234D of the I.T. Act, 1961 if the refund was issued to the assessee before 1.6.2003."
22. Since the issue in ITA No. 1034/M/08 and the present appeal i.e. 1036/M/08 are identical, Paras 6 to 12 in ITA 1034/M/08 has to be followed. Therefore, the Revenue's appeal in ITA No. 1036/M/08 is dismissed.
C.O. No. 94/M/2008 - A.Y. 2002-03
23. The ground raised by the assessee in the cross objection reads as follows:
"The Ld. CIT(A) erred in not adjudicating on the following ground of appeal of the respondent, holding that the ground is not arising from the order passed by the AO and that the respondent is not clear about what he wants:-
That the ADIT erred in not correctly computing the interest payable u/s./ 244A of the Act on the refund of taxes due to them"
24. The Ld. CIT(A) has held as follows:
"The appellant pray that the AO be directed to re-compute the interest u/s. 244A in accordance with the law upto the date of receipt of the refund. The appellants also submit that they are 6 Bank of Behrain entitled to compensation on the interest which has been wrongfully retained. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. 280 ITR 643, Instruction No. 2/2007 dt. 28.3.2007 issued by the CBDT and the decision of the Bombay High Court in the case of CIT Vs Pfizer Ltd. 191 ITR 626.
I find that this ground is not arising from the order passed by the AO so this ground of appeal is not adjudicated upon."
25. We find that the assessee has raised ground No.8 specifically before the Ld. CIT(A) that the ACIT should be directed to compute and grant to the assessee the interest payable u/s. 244A of the Act on the refund of taxes due, in accordance with law. The Ld. Counsel for the assessee submitted that the order passed u/s. 250 for the A.Y. 2002-03 dt. 8.2.2007 wherein the interest u/s. 244A has been determined at Rs. 52,28,420/-. Therefore we direct the AO to recompute interest u/s. 244A in accordance with law upto the receipt of the refund after considering the decision in the case of Sandvik Asia Ltd. 280 ITR 643, CIT Vs Pfizer Ltd. 191 ITR 626 and the Instruction No. 2/2007 dt. 28.3.2007 issued by the CBDT. Therefore we set aside this issue to the file of the AO to give one more opportunity to the assessee and decide the issue in accordance with law.
26. In the result, the Cross Objection filed by the assessee is allowed for statistical purposes.
Order pronounced on this 16th day of July, 2010 Sd/- Sd/-
(P.M. JAGTAP) (ASHA VIJAYARAGHAVAN)
Accountant Member Judicial Member
Mumbai, Dated 16th July, 2010
Rj
7 Bank of Behrain
Copy to :
1. The Appellant
2. The Respondent
3. The CIT-concerned
4. The CIT(A)-concerned
5. The DR 'L-1 ' Bench
True Copy
By Order
Asstt. Registrar, I.T.A.T, Mumbai
8 Bank of Behrain
Date Initials
1 Draft dictated on: 12.7.2010 Sr. PS/PS
2. Draft placed before author: 13.7.2010 ______ Sr. PS/PS
3. Draft proposed & placed before _________ ______ JM/AM
the second member:
4. Draft discussed/approved by _________ ______ JM/AM
Second Member:
5. Approved Draft comes to the Sr. _________ ______ Sr. PS/PS
PS/PS:
6. Kept for pronouncement on: _________ ______ Sr. PS/PS
7. File sent to the Bench Clerk: _________ ______ Sr. PS/PS
8. Date on which file goes to the _________ ______
Head Clerk:
9. Date of dispatch of Order: _________ ______