Disallowance under s.14A r/w Rule 8D was held inapplicable where...

Disallowance under s.14A r/w Rule 8D was held inapplicable where dividend-yielding shares were held as stock-in-trade; no proximate expenditure was established, so the disallowance was deleted. Exclusion of foreign branch profits was rejected; instead, treaty-based foreign tax credit (FTC) was to be granted upon verification of foreign taxes paid, non-claim earlier, and DTAA admissibility, and computed jurisdiction-wise; the issue was restored to the AO for limited verification. Carried-forward FTC for prior-year foreign taxes was allowed where the corresponding foreign income became taxable in India only when losses were set off; AO to cap credit to domestic tax incidence and verify, with remand. MAT under s.115JB was held inapplicable to the assessee bank. Deduction under s.36(1)(viia) was directed to be computed before set-off of brought-forward losses. Refund interest under s.244A directions were upheld. - ITAT