Abn Amro Bank N.V. vs Central Board Of Direct Taxes
2006 Latest Caselaw 700 Del

JUDGMENT

T.S. Thakur, J.

Page 1660

1. Everything that constitutes 'cause of action' for the petitioner to seek redress, has occurred in Kolkata. For instance, the assessment proceedings resulting in the levy of interest under Sections 234B and 234C of the Income Tax Act, 1961 were completed in Kolkata. Appeals arising out of such assessments are pending before the income-tax authorities/Tribunal at Kolkata. Deductions on account of interest, of which the petitioner seeks a refund, were being made in Kolkata. Even applications for waiver of interest levied were filed initially before the jurisdictional Chief Commissioner of Income Tax at Kolkata.

2. The question in the above backdrop is whether the present writ petition ought to be entertained in Delhi, just because one of the reliefs which the petitioner claims is, in the nature of a mandamus against two of the respondents who are stationed here. The respondents argue that the petitioner cannot maintain the present writ petition in Delhi, not only because no part of the alleged cause of action has accrued to the petitioner in Delhi Page 1661 but also because Delhi High Court is not a forum convenient to the respondents. We are inclined to uphold that objection, but before we state the reasons in support of our view, we may briefly, recall a few facts :-

3. The petitioner is a non-resident bank carrying on business in India through its branches. It is common ground that the income of the petitioner accruing and arising in India and attributable to its permanent establishment here, is liable to be taxed. The petitioner appears to have claimed that a lesser rate of tax as applicable to domestic banks be applied to its income. That plea was accepted initially for the assessment year 1991-92. Even the CBDT had, according to the petitioner, accepted that position by its letter dated 1st November, 1994.

4. In terms of his order dated 24th February, 2000, CIT (Appeals) issued a notice to the petitioner for enhancement of the rate of tax leviable on the income of the petitioner. Even the CBDT is said to have gone back on its earlier decision and insisted that a higher rate of tax was applicable to the non-residents like the petitioner. For nearly six years between 1994 to 2000, when this notice was issued, the petitioner had continued paying tax at the lower rate. The Income-tax Department is now reopening the issue to impose a higher rate of tax. The petitioner is not assailing in this petition the proposed levy of a higher rate of tax. Its grievance is limited to the waiver of interest payable on the levy of higher rate of tax. The petitioner's case is that it had paid a lower rate of tax on the faith of the order passed by the CIT(Appeals) and the communication from the CBDT. It cannot, argues the petitioner, now be made liable to pay interest on the differential amount under Section 234B and 234C of the said Act. Waiver of interest was, therefore, claimed by the petitioner in terms of letters addressed by it to the respondents. These letters have not, according to the petitioner, evoked any response from the competent authority, forcing the petitioner to seek a mandamus directing respondent No. 2 to grant waiver of interest payable under Section 234B and 234C of the Act in terms of a circular dated 23rd May, 1996 issued by Respondent CBDT. In addition, the petitioner has prayed for a certiorari quashing order dated 14th May, 2004 passed by the Deputy Director of Income-tax (International Taxation), Kolkata apart from a mandamus directing refund of the amount already recovered and a restraint against adjustment of any future amount. The relief prayed for by the petitioner is in the following terms :

It is, therefore, most respectfully prayed that your Lordships may graciously be pleased to

i) issue a Writ of Mandamus or by any other appropriate Writ or Order or direction under Article 226 of the Constitution of India directing the Respondent No. 2 to extend to the Petitioner the benefit of the circular issued by Respondent No.1 dated 23.5.1996 granting waiver of interest under Section 234B & 234C in so far as the interest relates to the additional demand caused by the modification of the rates of tax.

ii) Issue a writ of certiorari or any other appropriate writ or direction calling for the records from the respondents and quash levy of interest pertaining to the rate of tax matter vide the order under Page 1662 Section 251 dated 14.5.2004 giving effect to CIT(A)'s order dated 28.2.2002 and adjustments towards interest vide letters dated 22.6.01 and 6.8.02 passed by the Respondents.

iii) Issue a writ of mandamus or any other writ, order or direction directing the respondents to waive the interest imposed under Section 234B and 234C of the Act for assessment Years 1992-93, 1993-94, 1994-95, 1997-98, 1998-99, 1999-00 in terms of the said CBDT Circular dated 23.5.96.

iv) issue a writ of mandamus or any other writ, order or direction directing the respondents to refund the amounts arbitrarily adjusted with interest thereupon from the date of adjustment.

v) Direct the respondents not to adjust any future amount from the refunds due to the petitioner.

vi) That without prejudice to other contentions, issue directions in the nature of a writ of Mandamus or any other writ, order and direction to Respondent No. 2 to deal with and dispose off the representations made by the Petitioner and grant to it the benefit of the Board's Circular dated 23.5.96.

vii) pass such other or further orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case.

5. It is manifest from the above that three of the four reliefs which the petitioner has prayed for relate to orders passed and proceedings held at Kolkata. The prayer for a writ of certiorari to quash order dated 14th May, 2004 passed by the Deputy Director of Income-tax (International Taxation) could and ought to be made in the jurisdictional High Court at Kolkata as the authority making the said order is situate in Kolkata. So also the prayer for a mandamus directing the refund of the amount recovered could be made before the Kolkata High Court as adjustments and the refund relate to amounts recovered under orders passed by the authorities in Kolkata. The third prayer for a mandamus directing the authorities not to adjust any future amounts also could and ought to be made only before the Kolkata High Court as the authorities against whom the said direction is sought, are situate within the jurisdiction of the said Court. The fourth relief prayed for by the petitioner, namely, a mandamus directing respondent No. 2 to consider the request for waiver of interest, no doubt, is directed against an authority situate in Delhi but that by itself, may not be sufficient to shift the forum for adjudication of the matter from Kolkata to Delhi. We say so because the prayer for a mandamus seeking waiver of interest under Section 234B and 234C has its genesis in proceedings conducted in Kolkata by authorities situate within the jurisdiction of the Kolkata High Court. There could, therefore, be no impediment for the petitioner to seek an appropriate relief in that regard from the Kolkata High Court especially when three other major reliefs which are being prayed for in this petition could be agitated exclusively in the High Court at Kolkata where the cause of action in regard to those reliefs has arisen.

Page 1663

6. In the totality of the above circumstances, we are not inclined to entertain this petition. The argument that since one of the reliefs prayed for by the petitioner is against an authority situate in Delhi and, therefore, a part of the cause of action arises in Delhi so as to entitle the petitioner to maintain this petition in Delhi has not impressed us. Except that one of the four reliefs prayed for in the petition is a mandamus against respondent No. 2, no part of the cause of action which constitutes the foundation for the filing of the present petition has arisen in Delhi so as to justify the choice of the forum shifting to Delhi in preference to Kolkata. The Supreme Court has in Kusum Ingots & Alloys Ltd. v. Union of India, 2004 (168) ELT 3(SC) clearly ruled that even if small part of the cause of action arises within the jurisdiction of a High Court, the same may not entitle the litigant to maintain a petition in that Court if the major part of the cause of action arises in relation to another High Court. The Court observed :

We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. (See Bhagar Singh Bagga v. Dewan Jagbir Sawhney AIR 1941 Cal.; Mandal Jalan v. Madanlal (1945) 49 CWN 357; Bharat Coking Coal Limited v. M/s. Jharia Talkies & Cold Storage Pvt. Ltd. (1997) CWN 122; S.S. Jain & Co. and Anr. v. Union of India and Ors. (1994) CHN 445; M/s. New Horizon Ltd. v. Union of India .

7. Keeping the facts and circumstances of the case in view, the submission made on behalf of the respondents that Delhi is not a forum convenient for adjudication of the issues being raised by the petitioner cannot be brushed aside.

8. In the result, this writ petition fails and is hereby dismissed, reserving liberty for the petitioner to seek appropriate redress in appropriate proceedings before the competent court.

9. No costs.