ITAT ruled in favor of a UAE-based banking company regarding...

ITAT ruled in favor of a UAE-based banking company regarding deductibility of head office expenses allocated to its Indian branches in Mumbai and New Delhi. Pre-amended Article 7(3) of India-UAE DTAA allowed full deduction of PE-attributable expenses without domestic law restrictions under Section 44C. The Tribunal held that express treaty provisions override domestic law, permitting full expense deduction before the Protocol amendment introduced domestic law limitations. Additionally, expenses incurred outside India specifically for Indian branches were deemed fully deductible under Section 37(1), falling outside Section 44C's scope which only covers common expenses shared between head office and branches. The ruling followed precedents set in Credit Agricole Indosuez and American Express Bank cases.