SUDHIR S. MEHTA,MUMBAI vs. D CIT CC 23, MUMBAI

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ITA 6833/MUM/2013Status: DisposedITAT Mumbai28 September 2016AY 2004-053 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal. The dismissal was based on the tax effect of the disputed amounts being below the monetary limit prescribed by CBDT circular for appeals before the ITAT.

What were the facts?

The Revenue appealed against the CIT(A)'s order concerning the deductibility of interest paid by an Indian Permanent Establishment (PE) of a foreign bank to its head office and other overseas branches. The Revenue also disputed the allowance of a provision for audit and professional fees.

What were the issues?

The primary issue was whether interest paid by an Indian PE to its foreign head office/branches is deductible. Another issue concerned the disallowance of professional fees due to non-deduction of TDS.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “K” BENCH, MUMBAI

Before: SHRI RAJENDRA & SHRI SAKTIJIT DEY

For Appellant: Ms. Chandni Shah
For Respondent: Shri Sanjeev Jain, Ms. Chandni Shah

आयकर अपीऱीय अधिकरण, म ुंबई न्यायपीठ ‘के’ म ुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI श्री राजेंद्र, ऱेखा सदस्य एवुं श्री शक्तिजीि दे, न्याययक सदस्य के समक्ष BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER आयकर अऩीऱ सं. / ITA no. 6833/Mum./2013 (ननधधारण वषा / Assessment Year : 2007–08) Asstt. Commissioner of Income Tax …….………. अऩीऱधथी / (International Taxation), Circle–I(1) 117, Scindia House, Ballard Pier Appellant Mumbai 400 038 v/s Abu Dhabi Commercial Bank Ltd. 75B, Rehmat Manzil ..…….………. प्रत्यथी / Veer Nariman Road Respondent Mumbai 400 020 PAN – AAACA4216B रधजस्व की ओर से / Revenue by : Shri Sanjeev Jain ननधधाररती की ओर से / Assessee by : Ms. Chandni Shah सुनवधई की तधरीख / आदेश घोषणध की तधरीख / Date of Hearing – 28.09.2016 Date of Order – 28.09.2016 आदेश / ORDER शक्तिजीि दे, न्याययक सदस्य के द्वारा / PER SAKTIJIT DEY, J.M.

Captioned appeal at the instance of the Revenue is directed against the order dated 31st July 2012, passed by the learned Commissioner (Appeals)–10, Mumbai, pertaining to assessment year 2007–08. Grounds raised by the Revenue are reproduced hereunder:–

2 Abu Dhabi Commercial Bank Ltd.

“1. Whether, on the facts and circumstances of the case and in law, the CIT(A) was justified in holding that interest payable by the Indian Permanent Establishment of the foreign bank to its HO and other overseas Branches, is deductible in computing the total income.

2. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in holding that interest income payable by the Indian PE of a foreign bank to its HO and branch offices abroad cannot be taken into account for the purpose of computing the income of HO liable to be taxed in India. 3(a) On the facts and circumstances of the case and in law, the CIT(A) erred in allowing deduction in respect of provision of Rs. 12,32,310/- on account of Audit and other Professional fees without appreciating that as TDS was not deducted in respect of such expenditure the same are not allowable in view of specific provisions of sec.40(a)(ia). 3(b) On the facts and circumstances of the case and in law, the CIT(A) erred in allowing deduction in respect of provision of Rs. 12,32,310/- on account of Audit and other Professional fees without appreciating that there is no exclusion provided u/s.40(a)(ia) in respect of provision for expenses. The Appellant prays that the order of the ld. CIT(A) on the above ground(s) be set aside and that of the Assessing Officer restored.”

2.

At the outset, the learned Departmental Representative submitted before us that the tax effect pertaining to the amounts disputed by the Department is less than the monitary limit of ` 10 lakh fixed by the CBDT in Circular no.21 of 2015 dated 10th December 2015, in relation to appeal before the Income Tax Appellate Tribunal. Taking into consideration the aforesaid submissions of the learned Departmental Representative and also finding that the CBDT circular under reference applies retrospectively even to pending appeals, we dismiss the appeal of the Department as not maintainable.

3 Abu Dhabi Commercial Bank Ltd.

3.

In the result, appeal stands dismissed. Order pronounced in the open Court on 29.09.2016

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