DDIT (IT) 1(2), MUMBAI v. DBS BANK LTD, MUMBAI

ITA 1746/MUM/2010 | 1998-1999
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 174619914 RSA 2010
Assessee PAN AAACT4652J
Bench Mumbai
Appeal Number ITA 1746/MUM/2010
Duration Of Justice 10 month(s) 25 day(s)
Appellant DDIT (IT) 1(2), MUMBAI
Respondent DBS BANK LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-01-2011
Assessment Year 1998-1999
Appeal Filed On 05-03-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI. V. DURGA RAO JUDICIAL MEMBER. I.T.A. NO. 1746/MUM/2010. ASSESSMENT YEAR : 1998-99. DY. DIRECTOR OF INCOME-TAX M/S DBS BANK LTD. (INTERNATIONAL TAXATION)-1(2) VS . 3 RD FLOOR FORT HOUSE MUMBAI. 221 DR. D.N. ROAD FORT MUMBAI 400 001. PAN AA ACT4652J APPELLANT RESPONDENT. AND C.O. NO. 187/MUM/2010 (IN ITA NO. 1746/MUM/2010) ASSESSMENT YEAR : 1998-99. M/S DBS BANK LTD. DY. DIRECTOR OF INCOME-TAX MUMBAI. VS. (INTERNATIONAL TAXATION)-1(2) MUMBAI. CROSS OBJECTOR. RESPONDENT. DEPARTMENT BY : SHRI R.S.SRIVASTAVA. ASSESSEE BY : MS. B AHROZE KAMDIN. O R D E R PER J. SUDHAKAR REDDY A.M. : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE CIT(APPEALS)-10 MUMBAI DATED 24-12-2009 ON THE FOL LOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE CLAIM OF LOSS ON V ALUATION OF UNMATURED FORWARD EXCHANGE CONTRACT IS AN ALLOWABLE DEDUCTION WITHOUT 2 APPRECIATING THAT SUCH LOSS IS NOTIONAL IN NATURE A ND WITHOUT APPRECIATING THAT FORWARD EXCHANGE CONTRACTS CANNOT BE CONSTRUED AS STOCK IN TRADE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN ALLOWING INTEREST U/S 244A OF THE A CT WHERE THE REFUND AROSE ON ACCOUNT OF SELF ASSESSMENT TAX WITHOUT APP RECIATING THAT THE WORDS IN ANY OTHER CASE OCCURRING IN SECTION 244A (1)(B) CANNOT BE CONSTRUED TO INCLUDE SELF ASSESSMENT TAX WHEN IT WA S NOT SPECIFICALLY INCLUDED IN CLAUSE (A) OF SEC. 244A(1) OF THE ACT. 2. WE HAVE HEARD MR. R.S. SRIVASTAVA THE LEARNED D R AND MS. BAHROZE KAMDIN LEARNED COUNSEL FOR THE ASSESSEE. BOTH THE PARTIES AGREED THAT BOTH THE GROUNDS ARE COVERED BY SEPARATE DECISIONS OF THE SP ECIAL BENCH OF THE TRIBUNAL. 3. AS FAR AS GROUND NO.1 IS CONCERNED THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN THE CASE OF BANK OF BAHRAIN AND KUWAIT VS. DCIT 132 TTJ 505 WHEREIN AT PARA 59 IT HELD AS FOLLOWS : 59. WE ACCORDINGLY HOLD THAT WHERE A FORWARD CONT RACT IS ENTERED INTO BY THE ASSESSEE TO SELL THE FOREIGN CURRENCY AT AN AGR EED PRICE AT A FUTURE DATE FALLING BEYOND THE LAST DATE OF ACCOUNTING PERIOD THE LOSS IS INCURRED TO THE ASSESSEE ON ACCOUNT OF EVALUATION OF THE CONTRACT O N THE LAST DATE OF THE ACCOUNTING PERIOD I.E. BEFORE THE DATE OF MATURITY OF THE FORWARD CONTRACT. RESPECTFULLY FOLLOWING THE SAME WE DISMISS GROUND NO.1 OF THE REVENUE. 4. COMING TO GROUND NO. 4 WHICH IS ON THE ISSUE OF DISALLOWANCE U/S 244A(1) THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL MUMBAI-B BENCH IN THE CASE OF ADDL.CIT VS. GRINDWELL NORTON LTD. 100 ITD 425. SIMILAR IS THE VIEW OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. N.G.E.G. LTD. 244 ITR 664 AN D THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHOLAMANDA LAM INVESTMENT AND FINANCE 3 CO. 294 ITR 438. RESPECTFULLY FOLLOWING THE AFORESA ID DECISIONS WE DISMISS GROUND NO. 2 OF THE REVENUE. 5. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ON THE FOLLOWING GROUNDS : 1(A) WITHOUT PREJUDICE TO THE RESPONDENTS CONTENTI ON THAT THE LOSS ON REVALUATION OF UNMATURED FORWARD FOREIGN EXCHANGE C ONTRACTS AS AT 31 ST MARCH 1998 OUGHT TO BE ALLOWED THE RESPONDENTS SU BMIT THAT IN THE EVENT THE LOSS OF RS.6 721 852 FOR THE ASSESSMENT YEAR 1 998-99 IS DISALLOWED THE SAME BE REDUCED WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSMENT YEAR 1999-2000 BEING THE YEAR OF REVERSAL (CREDITED TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH 1999). THE RESPONDENTS PAY THAT THE AO BE SUITABLY DIRECT ED IN THIS REGARD. (B) WITHOUT PREJUDICE TO THE ABOVE THE RESPONDENTS SUBMIT THAT IN THE EVENT THE LOSS ON REVALUATION OF UN-MATURED FORWARD FOREI GN EXCHANGE CONTRACTS OF RS.6 721 852 FOR THE ASSESSMENT YEAR 1998-99 IS HELD AS DISALLOWABLE THE LOSS BE CONSIDERED ON NET BASIS AFTER REDUCING FRO M THE SAME THE PROFIT OF RS.3 764 900 ON REVALUATION OF UN-MATURED FORWARD F OREIGN EXCHANGE CONTRACTS PERTAINING TO THE IMMEDIATELY PREVIOUS AS SESSMENT YEAR. THE RESPONDENTS PRAY THAT THE AO BE SUITABLY DIREC TED IN THIS REGARD. 2. THE RESPONDENTS SUBMIT THAT CIT(A) OUGHT TO HAV E DIRECTED THE AO TO GRANT CREDIT FOR TAX DEDUCTED AT SOURCE (TDS) OF RS .4 872 (RS.3 448 392 - RS.3 443 520). THE RESPONDENTS PRAY THAT THE AO BE SUITABLY DIREC TED IN THE MATTER. 3. THE CIT(A) OUGHT TO HAVE HELD THAT THE RESPONDE NTS HAVE SUFFERED LOSS OF REVENUE ON ACCOUNT OF INTEREST UNDER SECTION 244 A ON REFUND THAT WAS RIGHTLY DUE AS WELL AS POTENTIAL INCOME IT WOULD HA VE EARNED ON INTEREST IF THEY WOULD HAVE RECEIVED IT ON TIME. 6. AFTER HEARING RIVAL CONTENTIONS WE DISMISS GROU ND NO. 1(A) AND (B) AS INFRUCTUOUS IN VIEW OF OUR DECISION IN REVENUE APPE AL. 7. COMING TO GROUND NO.2 WE DIRECT THE AO TO VERIF Y THE CLAIM OF THE ASSESSEE AND GRANT CREDIT OF TAX DEDUCTED AT SOURCE IF THE CLAIM IS FOUND CORRECT. 4 8. COMING TO GROUND NO.3 THE ASSESSEE CLAIMS INTER EST U/S 244A. THIS ISSUE HAS NOT BEEN SPECIFICALLY DECIDED BY THE CIT(APPEAL S). AS WE ARE REMITTING GROUND NO.2 TO THE FILE OF THE AO WE DEEM IT PROPER TO SE T ASIDE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO CONSIDER THE CLAIM OF THE AS SESSEE FOR INTEREST IN ACCORDANCE WITH LAW. THE AO SHALL KEEP IN MIND THE DECISIONS O F THE HONBLE SUPREME COURT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT 280 ITR 64 3 (SC) AND IN THE CASE OF CIT VS. H.E.G. LTD. 324 ITR 331 (SC). THUS GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY 2011. SD/- SD/- (V. DURGA RAO)) (J. SUDHAK AR REDDY) JUDICIAL MEMBER. A CCOUNTANT MEMBER MUMBAI DATED: 28 TH JANUARY 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR D-BENCH (TRUE COPY) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI.