SBT, Trivandrum v. ACIT, Trivandrum

ITA 374/COCH/2013 | 2004-2005
Pronouncement Date: 11-10-2013

Appeal Details

RSA Number 37421914 RSA 2013
Assessee PAN AAGCS9120G
Bench Cochin
Appeal Number ITA 374/COCH/2013
Duration Of Justice 4 month(s) 6 day(s)
Appellant SBT, Trivandrum
Respondent ACIT, Trivandrum
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 11-10-2013
Date Of Final Hearing 12-09-2013
Next Hearing Date 12-09-2013
Assessment Year 2004-2005
Appeal Filed On 04-06-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND B.R.BASKAR AN AM I.T.A. NOS. 373-376/COCH/2013 ASSESSMENT YEARS : 1990-91 2004-05 & 2006-07 STATE BANK OF TRAVANCORE HEAD OFFICE (TAX CELL) POOJAPPURA TRIVANDRUM. [PAN: AAGCS 9120G] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX RANGE-1 TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) I.T.A. NO. 381/COCH/2013 ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(1) TRIVANDRUM. VS. STATE BANK OF TRAVANCORE HEAD OFFICE (TAX CELL) POOJAPPURA TRIVANDRUM. [PAN: AAGCS 9120G] (REVENUE-APPELLANT) (ASSESSEE-R ESPONDENT) ASSESSEE BY SHRI C. NARESH FCA REVENUE BY SMT. S. VIJAYAPRABHA JR. DR DATE OF HEARING 12/09/2013 DATE OF PRONOUNCEMENT 11/10/2013 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: ALL THESE APPEALS ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LD. CIT(A) TRIVANDRUM. BOTH THE ASSESSEE AND THE REVENUE HAVE FILED CROSS APPEALS FOR ASSESSMENT YEAR 2006-07. HOWEVER THE ASSESSEE HAS FILED APPEALS FOR THE ASSESSMENT YEARS 1990-91 AND 2004-05. I.T.A. NOS. 373-376 & 381/COCH/2013 2 2. WE SHALL FIRST TAKE UP THE APPEALS FILED BY BOTH THE PARTIES FOR ASSESSMENT YEAR 2006-07. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS A PUBLIC SECTOR BANK. THE ASSESSMENT IN THE HANDS OF THE AS SESSEE FOR THE ASSESSMENT YEAR 2006-07 WAS COMPLETED BY THE ASSESSING OFFICER BY M AKING VARIOUS ADDITIONS. THE ASSESSEE CHALLENGED ALL THE ADDITIONS BEFORE THE LD . CIT(A) BUT COULD GET ONLY PARTIAL RELIEF. HENCE THE ASSESSEE HAS FILED THE APPEAL C HALLENGING THE DECISION OF THE LD. CIT(A) IN SUSTAINING THE DISALLOWANCE MADE U/S. 14A OF THE ACT. THE REVENUE HAS FILED APPEAL CHALLENGING THE DECISION OF THE LD. CIT(A) I N DELETING THE DISALLOWANCE OF CONTRIBUTION MADE TO RETIRED EMPLOYEES MEDICAL BENEF IT SCHEME. 3. THE ASSESSEE HAS URGED TWO GROUNDS VIZ. ONE CHA LLENGING THE DISALLOWANCE MADE U/S 14A OF THE ACT AND THE OTHER CHALLENGING T HE METHOD OF COMPUTATION OF DISALLOWANCE U/S 14A OF THE ACT. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE GROUND RAISED ON THE FIR ST POINT VIS. CHALLENGING THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. IN THIS REGARD HE ALSO MADE NECESSARY ENDORSEMENT IN THE GROUNDS OF APPEAL. AC CORDINGLY THE SAID GROUND IS DISMISSED AS WITHDRAWN. 4. THE REMAINING GROUND RELATES TO THE METHOD OF CO MPUTATION OF DISALLOWANCE MADE U/S. 14A OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS INCLUDED THE PROFIT ON SALE OF INVESTMENTS AMOUNTING TO RS.67.25 CRORES AS EXEMPTED INCOME AND ACCORDINGLY COMPUTED THE DISALLOWANCE U/S. 14A OF THE ACT. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS PAID TAX ON THE ABOVE SAID AMOUNT AND HENCE THE ASSESSING OFFICER WAS NO T CORRECT IN TREATING THE SAME AS EXEMPTED INCOME. THE LD. DR HOWEVER CONTENDED THA T THE ABOVE SAID SUBMISSION MADE BY LD A.R REQUIRES EXAMINATION AND ACCORDINGLY PLEADED THAT THIS MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. TH E LD. AR ALSO DID NOT OBJECT TO THE SAID PLEA. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ABOVE SAID CLAIM OF THE ASSESSEE AND IF SATISFIED WITH THE SA ME RE-COMPUTE THE DISALLOWANCE U/S. 14A ACCORDINGLY AFTER AFFORDING NECESSARY OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. I.T.A. NOS. 373-376 & 381/COCH/2013 3 5. IN THE APPEAL FILED BY THE REVENUE THE ONLY ISS UE CONTESTED RELATES TO THE DELETION OF DISALLOWANCE OF CONTRIBUTION MADE TO RE TIRED EMPLOYEES MEDICAL BENEFIT SCHEME WHICH WAS DISALLOWED U/S. 40A(9) OF THE ACT . THE LD. AR POINTED OUT THAT THIS IS A RECURRING ISSUE AND THE TRIBUNAL HAS ALREADY D ECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 IN I.T.A. NO. 861/COCH/2005 VIDE ITS ORDER DATED 08-08-2007. HE FURTHER SUBMITTED THAT THE TR IBUNAL HAS FOLLOWED ITS DECISION IN THE SUBSEQUENT YEAR ALSO I.E. IN ASSESSMENT YEAR 2005-06 IN I.T.A. NO. 114/COCH/2012. HE SUBMITTED THAT THE LD. CIT(A) HA S FOLLOWED THE DECISION RENDERED BY THE ITAT WHILE DELETING THE DISALLOWANCE. W ALS O HEARD THE LD. DR WHO DID NOT OBJECT TO THE FACTUAL FACTS SUBMITTED BY THE LD. AR . WE ALSO NOTICE THAT THE LD. CIT(A) HAS FOLLOWED THE DECISION RENDERED BY THE TRIBUNAL DATED 08-08-2007 IN I.T.A. NO. 861/COCH/2005 RELATING TO THE ASSESSMENT YEAR 2002- 03 WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- IN OUR FURTHER CONSIDERED OPINION THE BONAFIDE CO NTRIBUTION MADE BY THE ASSESSEE AS AN EMPLOYER TO THE FUND SET UP AS A PAR T OF THE AGREEMENT BETWEEN THE ASSESSEE BANK AND ITS EXECUTIVE EMPLOYEES IS NO T BY THE SUB-SECTION (9) OF SECTION 40A. THE DETAILS OF ANY DECISION OF HIGHER JUDICIAL FORU M ON THE ABOVE SAID ISSUE EITHER AFFIRMING OR REVERSING OR MODIFYING THE ABOVE VIEW WERE NOT PUT BEFORE US. UNDER THESE CIRCUMSTANCES IN OUR VIEWS THE LD. CIT(A) W AS JUSTIFIED IN FOLLOWING THE DECISION OF JURISDICTIONAL TRIBUNAL ON THIS ISSUE. 6. ALL THE REMAINING THREE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE ONLY ISSUE URGED IN ALL THESE APPEALS RELATES TO THE COM PUTATION OF INTEREST U/S. 244A OF THE ACT. 7. DURING THE COURSE OF HEARING THE LD. COUNSEL FO R THE ASSESSEE STRONGLY PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT (2006) (280 ITR 643) TO CONTEND THAT THE IN TEREST U/S. 244A COMPUTED BY THE ASSESSING OFFICER IS NOT CORRECT IN AS MUCH AS HE D ID NOT GRANT INTEREST ON INTEREST. I.T.A. NOS. 373-376 & 381/COCH/2013 4 HOWEVER WE NOTICE THAT THE HONBLE SUPREME COURT O F INDIA VIDE ITS ORDER DATED 18- 09-2013 RENDERED IN THE CASE OF CIT VS. GUJARAT FLU ORO CHEMICALS IN SLP(C) NO. 11406 OF 2008 HAS HELD AS UNDER: 6. IN OUR CONSIDERED VIEW THE AFORESAID JUDGMENT HAS BEEN MISQUOTED AND MISINTERPRETED BY THE ASSESSEES AND ALSO BY THE REV ENUE. THEY ARE OF THE VIEW THAT IN SANDVIK CASE (SUPRA) THIS COURT HAD DIRECTE D THE REVENUE TO PAY INTEREST ON THE STATUTORY INTEREST IN CASE OF DELAY IN THE PAYM ENT. IN OTHER WORDS THE INTERPRETATION PLACED IS THAT THE REVENUE IS OBLIGE D TO PAY AN INTEREST ON INTEREST IN THE EVENT OF ITS FAILURE TO REFUND THE INTEREST PAYABLE WITHIN THE STATUTORY PERIOD. 7. AS WE HAVE ALREADY NOTICED IN SANDVIK CASE (SUP RA) THIS COURT WAS CONSIDERING THE ISSUE WHETHER AN ASSESSEE WHO IS MADE TO WAIT F OR REFUND OF INTEREST FOR DECADES BE COMPENSATED FOR THE GREAT PREJUDICE CAUS ED TO IT DUE TO THE DELAY IN ITS PAYMENT AFTER THE LAPSE OF STATUTORY PERIOD. IN THE FACTS OF THAT CASE THIS COURT HAD COME TO THE CONCLUSION THAT THERE WAS AN INORDI NATE DELAY ON THE PART OF THE REVENUE IN REFUNDING CERTAIN AMOUNT WHICH INCLUDED THE STATUTORY INTEREST AND THEREFORE DIRECTED THE REVENUE TO PAY COMPENSATION FOR THE SAME NOT AN INTEREST ON INTEREST. 8. FURTHER IT IS BROUGHT TO OUR NOTICE THAT THE LEG ISLATURE BY THE ACT NO. 4 OF 1988 (W.E.F. 01.04.1989) HAS INSERTED SECTION 244A TO TH E ACT WHICH PROVIDES FOR INTEREST ON REFUNDS UNDER VARIOUS CONTINGENCIES. WE CLARIFY THAT IT IS ONLY THAT INTEREST PROVIDED FOR UNDER THE STATUTE WHICH MAY B E CLAIMED BY AN ASSESSEE FROM THE REVENUE AND NO OTHER INTEREST ON SUCH STATUTORY INTEREST. 8. THE ABOVE DECISION OF THE HONBLE SUPREME COURT HAS BEEN RENDERED SUBSEQUENT TO THE COMPLETION OF HEARING BY THIS TRIBUNAL. THE ISSUE OF DETERMINATION OF QUANTUM OF INTEREST U/S 244A IS NOW SETTLED BY THE HONBLE SUP REME COURT. ACCORDINGLY IN OUR VIEW THE ISSUE URGED BY THE ASSESSEE BEFORE US REQ UIRES FRESH EXAMINATION BOTH BY THE ASSESSEE AS WELL AS BY THE ASSESSING OFFICER IN THE LIGHT OF THE HONBLE SUPREME COURT DECISION REFERRED ABOVE. HENCE WE ARE OF THE VIEW THAT THE ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IN ALL THE THREE YEARS AND RESTORE TH E SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ISSUE AFRES H IN THE LIGHT OF THE HONBLE SUPREME COURT DECISION REFERRED ABOVE. THE ASSESSEE IS ALS O DIRECTED TO MAKE NECESSARY SUBMISSIONS IN THIS REGARD TO THE ASSESSING OFFICER . I.T.A. NOS. 373-376 & 381/COCH/2013 5 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE F OR THE ASSESSMENT YEAR 2006-07 IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IS TREATED AS PARTLY ALLOWED. ALL THE OTHER THREE APP EALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED. PRONOUNCED ACCORDINGLY ON 11-10-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 11TH OCTOBER 2013 GJ COPY TO: 1. STATE BANK OF TRAVANCORE HEAD OFFICE (TAX CELL) POOJAPPURA TRIVANDRUM. 2.THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE- 1(1) TRIVANDRUM. 3.THE ASSISTANT COMMISSIONER OF INCOME-TAX RANGE-1 TRIVANDRUM. 4 THE COMMISSIONER OF INCOME-TAX(APPEALS) TRIVANDR UM. 5.THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. 6. D.R. I.T.A.T. COCHIN BENCH COCHIN. 7. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T COCHIN