Appeals filed u/s 260A should not be casual and callous

Brief Analysis of the case

In the present case the Hon’ble High Court dismissed the appeal of the revenue in which five issues were involved. Regarding first three issues the Hon’ble High Court held that the way appeals were filed were totally casual and callous in nature.

• As, in the first issue the Tribunal granted the Revenue’s prayer and held that interest earned on NOSTRO account is taxable and before the Hon’ble High Court the question framed was that the Tribunal erred in granting interest on NOSTRO account. Therefore, the Hon’ble High Court observed that it is beyond comprehension as to how a party can be aggrieved by an order that grants its prayer.

• Regarding the second and third issue the Hon’ble High Court observed that the Revenue have challenged the question which was never agitated before the Hon’ble Tribunal without even a whisper as to why the concession made before the Tribunal was not correct. The Hon’ble High Court further observed that the frivolous appeals add to the burden of the Court and thoughtless prosecution of these takes time of the Court which could be utilised for more meritorious cases. Further, it was observed that filing of appeal under Section 260A of the Act is a serious issue. The parties who seek to file such appeals must do so after due application of mind and not raise frivolous / concluded issues. This is certainly expected of the State.
• Regarding fourth issue the Hon’ble High Court upheld the decision of Hon’ble ITAT where the AO was directed to tax the interest received u/s 244A at the rate prescribed in Article 12 of DTAA between India and France. The Hon’ble High Court found that the Hon’ble Tribunal while relying on the Judgement of Assistant Commissioner of Income Tax vs. Clough Engineering Ltd. [130 ITD 137] observed that interest on income tax refund is not effectively connected with the permanent establishment either on asset or activity test.
• Regarding fifth and last issue the Hon’ble High Court upheld the view of Hon’ble Tribunal where it was held that the interest received by the Indian Permanent Establishment of the foreign bank from its HO and other overseas Branches, is not chargeable to tax in computing the total income as no one cannot make profit out of himself and therefore the interest received by the Assessee from it’s own Head Office is not chargeable to tax.