Bank of India v. Deputy Commissioner of Incometax

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The Tax PublishersITA No. 2781 (Mum.) of 2011 2013 TaxPub(DT) 0143 (Mum-Trib) : (2012) 139 ITD 0493 INCOME TAX ACT, 1961 --Income deemed to accrue or arise under section 9(1)(iv)--Income attributable to foreign branches Permanent establishment--Assessee was a Indian banking concern and having several foreign branches. Based on provisions of DTAA, assessee sought relief in respect of income earned by the Foreign Branches, which was denied by the assessing officer however, allowing relief in respect of foreign branches situated only at Singapore and Japan. *Held:* Foreign branches were to be treated as permanent establishment earned income from outside India and thus, the such income were could not be taxed in India. In all the foreign countries the operation is carried out through its branches which is a permanent establishment situated outside India. Hence the, income attributable to these branches cannot be taxed in India. Therefore consistent with the earlier finding, of the Tribunal in assessee's own case for the earlier years case, there is no merit in the ground taken by the revenue'. in the instant case also, the view should be taken in the assessee's favour. [Para 34] Income Tax Act, 1961 Section 9(1)(iv) OECD Model Tax Convention Article 5 INCOME TAX ACT, 1961 --business expenditure --Disallowance under section 14A Infrastructure landing interest--assessing officer taking the basis of addition made in respect of infrastructure lending interest at the rate of 12 per cent disallowed certain sums under section 14A. The disallowance made by the assessing officer was directed to be 5 per cent of the average of investment yielding tax free income. *Held:* The issue is restored to the assessing officer to disallow a reasonable amount under section 14A in view of direction given by various co-ordinate Benches. Income Tax Act, 1961 Section 14A INCOME TAX ACT, 1961 --Business expenditureAllowability Prior period expenses--Even though the expenditure are treated technically as prior period expenses, it relates to continuous flow of expenditure there is, therefore, no justification in disallowing the expenditure otherwise normally eligible for deduction. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA No. 2781 (Mum.) of 2011
2013 TaxPub(DT) 0143 (Mum-Trib) : (2012) 139 ITD 0493

INCOME TAX ACT, 1961

--Income deemed to accrue or arise under section 9(1)(iv)--Income attributable to foreign branches Permanent establishment--Assessee was a Indian banking concern and having several foreign branches. Based on provisions of DTAA, assessee sought relief in respect of income earned by the Foreign Branches, which was denied by the assessing officer however, allowing relief in respect of foreign branches situated only at Singapore and Japan. Held: Foreign branches were to be treated as permanent establishment earned income from outside India and thus, the such income were could not be taxed in India.

In all the foreign countries the operation is carried out through its branches which is a permanent establishment situated outside India. Hence the, income attributable to these branches cannot be taxed in India. Therefore consistent with the earlier finding, of the Tribunal in assessee's own case for the earlier years case, there is no merit in the ground taken by the revenue'. in the instant case also, the view should be taken in the assessee's favour. [Para 34]

Income Tax Act, 1961 Section 9(1)(iv)

OECD Model Tax Convention Article 5

INCOME TAX ACT, 1961

--business expenditure --Disallowance under section 14A Infrastructure landing interest--assessing officer taking the basis of addition made in respect of infrastructure lending interest at the rate of 12 per cent disallowed certain sums under section 14A. The disallowance made by the assessing officer was directed to be 5 per cent of the average of investment yielding tax free income. Held: The issue is restored to the assessing officer to disallow a reasonable amount under section 14A in view of direction given by various co-ordinate Benches.

Income Tax Act, 1961 Section 14A

INCOME TAX ACT, 1961

--Business expenditureAllowability Prior period expenses--Even though the expenditure are treated technically as prior period expenses, it relates to continuous flow of expenditure there is, therefore, no justification in disallowing the expenditure otherwise normally eligible for deduction.