2010 (12) TMI 1311 - AT - Income Tax

Tribunal upholds foreign tax as business expense, dismisses ship maintenance claim. COD approval crucial.

The Tribunal upheld the CIT(A)'s decision to allow foreign tax payments as business expenditure under section 37(1) of the Income Tax Act, rejecting the ... - Issues involved: Appeal by Revenue against CIT(A) order, consideration of foreign tax payments as business expenditure, approval by COD for pursuing specific issue, disallowance of expenses on maintenance of ships.Consideration of foreign tax payments: The appeal focused on whether foreign tax payments claimed as expenses by the assessee were allowable. The COD granted approval to pursue the issue related to foreign tax payments only. The Assessing Officer disallowed the claimed expenditure based on a previous ITAT decision, but the assessee argued that it was allowable under section 37 of the Income Tax Act as it was incurred for the business purpose. The CIT(A) allowed the claim, stating that disallowance can only be made for taxes levied on profits and gains, not foreign taxes. The Tribunal, following previous decisions, dismissed the revenue's appeal, upholding the allowability of foreign tax payments under section 37(1) of the Act.Disallowed expenses on maintenance of ships: The Revenue raised a second ground regarding the allowance of expenses on maintenance of ships during the accounting period. However, as there was no approval from COD to pursue this issue, the Tribunal dismissed this ground of appeal. The Tribunal stated that the Revenue could pursue this issue once COD approval was obtained, emphasizing compliance with the law in such matters.Conclusion: The Tribunal dismissed the Revenue's appeal and rejected the assessee's C.O., citing previous decisions and the specific approval granted by COD for considering the issue of foreign tax payments. The judgment was pronounced on 23rd December 2010.