CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK,MUMBAI vs. THE ASSISTANT COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION - 2(1)(1), MUMBAI

ITA 3453/MUM/2026Status: DisposedITAT Mumbai08 October 2026AY 2022-2321 pages
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What were the facts?

The assessee, Credit Agricole Corporate and Investment Bank, filed appeals against final assessment orders for Assessment Years (AY) 2021-22 and 2022-23, passed by the Assessing Officer (AO) under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961, pursuant to directions from the Dispute Resolution Panel (DRP). The appeals were heard together due to common issues. The assessee's grounds of appeal for AY 2021-22 included challenges to the deductibility of Head Office (HO) expenses, taxability of interest payments from the India branch to HO, transfer pricing adjustments for marketing of derivatives and ECBs, adjustments for re-issuance of bank guarantees, allocation of HO expenses, and the levy of interest and initiation of penalty proceedings. For AY 2022-23, grounds included the validity of a notice under Section 143(2) and the assessment being barred by limitation.

What did the Tribunal hold?

The Tribunal decided on several grounds. For grounds 10 and 11 (AY 2021-22) concerning the taxability of interest on ECBs, the Tribunal restored the issue to the AO to recompute the taxable amount after considering the income already attributed to the Indian PE, ensuring no double taxation, following earlier orders in the assessee's own case. These grounds were allowed for statistical purposes. For ground 12 (AY 2022-23) regarding surcharge and health/education cess on income taxed at treaty rates, the Tribunal held that these cannot be levied over and above the treaty ceiling and directed the AO to recompute tax accordingly, allowing the ground. For grounds related to TDS credit (ground 12 for AY 2021-22 and grounds 13-15 for AY 2022-23), the Tribunal directed the AO to verify credits from Form 26AS and supporting documents and grant credit as per law, allowing these grounds for statistical purposes. For ground 13 (AY 2021-22) on the tax rate for interest under Section 244A, the Tribunal directed the AO to recompute tax at the applicable treaty rate, following a Bombay High Court decision in the assessee's own case, allowing the ground. For grounds on interest under Sections 234A, 234B, and 234C (grounds 14-16 for AY 2021-22 and ground 16 for AY 2022-23), the AO was directed to recompute if leviable, while verifying the return filing date for Section 234A, allowing these grounds for statistical purposes. For ground 17 (both years) concerning penalty proceedings, the Tribunal held the challenge to be premature and not requiring adjudication in the quantum appeal. The issues related to deductibility of HO expenses (grounds 1 & 2), transfer pricing adjustments (grounds 4, 5, 6), and allocation of HO expenses (ground 7) were not explicitly decided in the provided excerpt.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether direct expenses towards Head Office System Implementation charges and Information System Asia Pacific charges are deductible under Section 44C or Section 37(1) of the Act. 2. Whether direct expenses towards credit risk assistance and EDP assistance provided by the HO to the India branch are deductible under Section 44C or Section 37(1) of the Act. 3. Whether interest payment by the India branch to the HO is taxable under Article 12 of the India-France Double Tax Avoidance Agreement (DTAA). 4. Whether transfer pricing adjustments for marketing of derivatives, marketing support services for ECBs, and commission for re-issuance of bank guarantees were correctly made. 5. Whether the allocation of HO and other expenses by an Associate Enterprise (AE) to the assessee was correctly treated as having an Arm's Length Price (ALP) of 'nil'. 6. Whether credit for taxes withheld on interest on ECB advances should be granted. 7. Whether interest received under Section 244A should be taxed at the rate prescribed in Article 12 of the India-France DTAA. 8. The validity of the notice issued under Section 143(2) and whether the assessment was barred by limitation for AY 2022-23. Assessee's contentions: - Expenses under grounds 1 and 2 are deductible under Section 37(1) and not Section 44C. - Interest payments (ground 3) and interest on ECBs (grounds 10 & 11) should not be taxed twice, considering attribution to the Indian Permanent Establishment (PE). - Transfer pricing adjustments (grounds 4, 5, 6) were ad hoc, unscientific, or disregarded functions performed and risks undertaken. - Penalty proceedings (ground 17) are premature. - Surcharge and cess cannot be levied over the treaty rate (ground 12 for AY 2022-23). - TDS credit should be granted (ground 12 for AY 2021-22 and grounds 13-15 for AY 2022-23). - Interest under Section 244A should be taxed at the treaty rate (ground 13 for AY 2021-22). - Interest under Sections 234A, 234B, and 234C should be recomputed (grounds 14-16 for AY 2021-22 and ground 16 for AY 2022-23). Revenue's contentions were not explicitly recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 37(1),Section 44C,Section 12,Section 194LC,Section 244A,Section 234A,Section 234B,Section 234C,Section 274,Section 270A,Section 153,Section 143(2),Section 92C,Section 10CA

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Heard together (2 matters)

ITA 6805/MUM/2024
ITA 3453/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अधिकरण, म ुंबई पीठें, म ुंबई INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI BENCH: I BEFORE SMT. BEENA PILLAI, HON’BLE JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, HON’BLE ACCOUNTANT MEMBER ITA 6805/MUM/2024 (निर्धारण वर्ा/Assessment Year: 2021-22) CREDIT AGRICOLE THE ASSISTANT CORPORATE AND COMMISSIONER OF INVESTMENT BANK INCOME TAX (INTERNATIONAL TAX)- 11TH, 12TH AND 14TH FLOOR, 2(1)(1) HOECHST HOUSE, NARIMAN POINT, MUMBAI, MUMBAI- KAUTILYA BHAWAN, Vs. 400021, MAHARASHTRA BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI MUMBAI-400051, MAHARASHTRA अपीलधर्थी Appellant प्रत्यर्थी Respondent

PAN of Assessee: AACCC3872B

अपीलधर्थी द्वारा/Appellant represented by: Shri Madhur Agarwal ,Adv Shri Kamlesh Makwana - CIT प्रत्यर्थी द्वारा/Respondent represented by: DR & Shri Sridhar Menon-Sr. DR

ITA 3453/MUM/2026 (निर्धारण वर्ा/Assessment Year: 2022-23) CREDIT AGRICOLE THE ASSISTANT CORPORATE AND COMMISSIONER OF INVESTMENT BANK INCOME-TAX INTERNATIONAL 11, 12 AND 14 FLOOR, TAXATION - 2(1)(1) HOECHST HOUSE, NARIMAN POINT, MUMBAI, MUMBAI- ROOM NO. 604, 6TH FLOOR, 400021, MAHARASHTRA KAUTILYA BHAVAN, C-41 TO Vs. C-43, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST) MUMBAI-400051, MAH

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