The Director Of Income Tax(International Taxation v. M/S. Standard Chartered Bank

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1999 OF 2011 The Director of Income tax(International Taxation) Vs. M/s. Standard Chartered Bank. ....Appellant. ...Respondent. Mr. Suresh Kumar for the Appellant. Mr. Ajit Shah i/by Mr. S.M. Iyer for the Respondent. CORAM : S.J.VAZIFDAR & M.S. SANKLECHA, JJ. DATE : 2[nd] July, 2012 PC: This appeal by the Revenue under Section 260A of the Income Tax Act (hereinafter referred to the “said Act”) challenges the order dated 24[th] November, 2010 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the “Tribunal”) relating to assessment year 2003-03. 2)Being aggrieved by order dated 24[th] November, 2010 the appellant has formulated the following substantial questions of law for consideration by this court. 1)Whether on the facts and in the circumstances of the case and in law the ITAT was correct in holding that the DIT (International Taxation) was not justified in invoking the provisions of Section 263 of the Income Tax Act? 2)Whether on the facts and in the circumstances of the case and in law the ITAT was correct in holding that the DIT (International Taxation) was not justified in invoking the provisions of Section 263, even when the order u/s.154 passed by the A.O. considered allowance of an issue which was debatable and therefore outside the ambit of provisions of Section 154? 3)Whether on the facts and in the circumstances of the case and in law the ITAT was correct in holding that interest u/s. 244A was allowable inspite of there being specific prohibition of allowing the same vide proviso to section 115JAA(2)? 4)Whether on the facts and in the circumstances of the case and in law the ITAT was justified in holding that MAT credit to be granted before the advance tax and TDS? On 31[[st]] March,2005, the Assessing Officer passed an 3)On 31[[st]] March,2005, the Assessing Officer passed an order under Section 143(3) of the said Act in respect of the respondent assessee for the Assessment Year 2002-03. Thereafter, by orders dated 18[th] May, 2005 and 22[nd] March, 2006 the Assessing Officer in exercise of his powers under Section 154 of the Act allowed MAT credit to the extent of Rs.76.68 crores and also granted interest u/s. 244A amounting to Rs.22.41 crores. The Director of Income Tax (International Taxation) was of the view that grant of interest in respect of Minimum Alternate Tax (MAT) credit is prohibited under Section 115JAA of the said Act. Consequently, in exercise of his powers under Section 263 of the said Act, the Director of Income Tax (International Taxation) by order dated 20[th] March, 2008 revised the assessment and held that grant of interest under section 244A is erroneous and prejudicial to the interest of the revenue and directed the Assessing Officer to withdraw the grant of interest which was allowed by virtue of orders passed under Section 154 of the Act. 4)Being aggrieved by the order dated 28[th] March, 2008 the respondent-assessee filed an appeal before the Tribunal. By an order dated 24[th] November, 2010, the Tribunal found that the Assessing Officer correctly set off MAT credit before adjusting the Advance tax and TDS as now held by this Court in the matter of CIT V. Apar Industries 323 ITR 411. Therefore, the Tribunal held that the interest has been correctly granted to the respondent assessee by orders dated 18[th] May,2005 and 22[nd] March, 2006. So far as exercise of powers by the Director of Income Tax (International Taxation) is concerned, the Tribunal held that the issue was a debatable one and therefore, the powers under Section 263 of the said Act could not have been exercised. 4)Being aggrieved by the order dated 28[th] March, 2008 the respondent-assessee filed an appeal before the Tribunal. By an order dated 24[th] November, 2010, the Tribunal found that the Assessing Officer correctly set off MAT credit before adjusting the Advance tax and TDS as now held by this Court in the matter of CIT V. Apar Industries 323 ITR 411. Therefore, the Tribunal held that the interest has been correctly granted to the respondent assessee by orders dated 18[th] May,2005 and 22[nd] March, 2006. So far as exercise of powers by the Director of Income Tax (International Taxation) is concerned, the Tribunal held that the issue was a debatable one and therefore, the powers under Section 263 of the said Act could not have been exercised. 5)Therefore, it is agreed that so far as Question Nos. 1 and 2 above are concerned, the same are covered in favour of the respondent assessee in view of the decision of the Apex Court in the matter of Commissioner of Income Tax v. Max India reported in 295 ITR 282. So far as Question Nos. 3 and 4 are concerned the same are also concluded in favour of the respondent assessee by virtue of the decision of this Court in the matter of CIT V. Apar Industries Limited (supra) . 6)In view of the above, no substantial question of law arises for consideration of this Court. The appeal is, accordingly, dismissed. No order as to costs. ( M.S. SANKLECHA, J. ) ( S. J. VAZIFDAR, J.)