Head office expenses allocation: restrict deductions to admissible apportioned costs and require strict documentation and scrutiny. Deduction of head office expenses allocable to an Indian branch is allowable if expenses are actual, admissible under tax law, and apportioned on a reasoned, consistent basis (e.g., receipts, turnover, assets). Internal transfers that merely reallocate funds within a single entity are not deductible; only costs actually incurred by the head office from third parties for the branch may be allowed. Income tax Officers must seek full global accounts, compare treatment with other branches and the home country, and may draw adverse inferences for non production of information.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Head office expenses allocation: restrict deductions to admissible apportioned costs and require strict documentation and scrutiny.
Deduction of head office expenses allocable to an Indian branch is allowable if expenses are actual, admissible under tax law, and apportioned on a reasoned, consistent basis (e.g., receipts, turnover, assets). Internal transfers that merely reallocate funds within a single entity are not deductible; only costs actually incurred by the head office from third parties for the branch may be allowed. Income tax Officers must seek full global accounts, compare treatment with other branches and the home country, and may draw adverse inferences for non production of information.
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