ITAT grants partial appeal, emphasizes fair hearing, case law consideration. Remits issues for fresh review.

The ITAT partly allowed the appeals, remitting specific issues back to the authorities for fresh consideration in line with provided directions. The ITAT stressed the importance of affording the assessee a fair hearing and considering relevant case laws. The decision was rendered on 22.5.2019.

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Issues Involved:
1. Disallowance under Section 14A.
2. Exclusion of income of foreign branches under Double Tax Avoidance Agreement (DTAA).
3. Broken period interest.
4. Taxation of foreign income in India.
5. Disallowance of provisions for wage arrears.
6. Amortization of investment.

Issue-Wise Detailed Analysis:

1. Disallowance under Section 14A:
The assessee contested the disallowance under Section 14A, arguing that exempt income was earned on stock in trade, to which Section 14A does not apply. The Assessing Officer (AO) made disallowances for A.Y. 2014-15 and 2015-16, asserting that the provisions of Section 14A were applicable. The learned CIT(A) upheld the AO's action. The ITAT noted that in the assessee’s own case for previous years, the issue was remitted back to the AO to consider various decisions, including the Hon'ble Apex Court's decision in Maxopp Investment Ltd., which held that expenditure incurred in acquiring shares held as stock-in-trade must be apportioned. The ITAT remitted the issue back to the AO with similar directions.

2. Exclusion of Income of Foreign Branches under DTAA:
The assessee argued that the income of foreign branches should be excluded based on Article 7 of the respective DTAA, which provides that business profits are to be taxed in respective countries. The learned CIT(A) and ITAT, following the precedent in the assessee’s own case for A.Y. 2011-12, upheld the inclusion of such income in the total income taxable in India, granting relief for taxes paid in foreign countries.

3. Broken Period Interest:
The AO disallowed the broken period interest, but the learned CIT(A) decided in favor of the assessee, referring to earlier appellate orders and decisions by the Hon'ble Supreme Court in Citibank and the Hon'ble Bombay High Court in HDFC Bank Ltd. The ITAT upheld the CIT(A)'s order, dismissing the Revenue's appeal.

4. Taxation of Foreign Income in India:
The AO included the income of foreign branches in the total income taxable in India, relying on Notification No. S 2123(e) dated 28.08.2008. The learned CIT(A) granted partial relief based on the decision of the Tribunal in the assessee’s own case for previous years. The ITAT, following the coordinate bench's decision, upheld the inclusion of foreign branch income in the total income taxable in India, with credit for taxes paid in foreign countries.

5. Disallowance of Provisions for Wage Arrears:
The assessee argued that the disallowance of provisions for wage arrears was covered in its favor by the Tribunal's decision for A.Y. 2009-10. The learned CIT(A) allowed the claim, following the consistent view taken by the Tribunal in previous years. The ITAT upheld the CIT(A)'s order, allowing the assessee's appeal on this ground.

6. Amortization of Investment:
The Revenue contended that the learned CIT(A) erred in admitting and allowing the issue regarding the claim of amortization of investment, which was not discussed in the assessment order. The ITAT found the Revenue's submission correct and noted that the assessee had filed a cross-objection regarding the allowability of lease premium paid for leasehold properties. The ITAT remitted the issue back to the learned CIT(A) for fresh consideration and to pass a speaking order.

Conclusion:
The appeals were partly allowed, with specific issues being remitted back to the respective authorities for fresh consideration and decision in accordance with the directions provided. The ITAT emphasized the need for adequate opportunity for the assessee to be heard and the consideration of relevant case laws and precedents. The order was pronounced on 22.5.2019.

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