TaxTMI 
TaxTMI 
2013 (9) TMI 603
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.... tax free income and interest bearing funds, no disallowance can be made from the gross income claimed as exempt u/s. 10 of the I.T. Act." The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." CO/227/M/05 : "(1) In the event the higher authorities uphold the action of the AO of taxing the sum of Rs. 31,72,18,980 for mobilising deposits for the SBT under the Indian Millennium Deposit (IMD), then without prejudice, the AO be directed to allow the amount paid to an independent party for acting as an agent for mobilizing the deposits and to customers as incentive for placing the deposits as well as related costs in doing the activity outside India aggregating in all the US $ 69,87,112 as a deduction. The respondents pray that the AO be directed accordingly. (2) In the event it is held by any higher authorities that the treaty provisions are not applicable to the Bank, the appellants submit that the sum of Rs....
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....he Indian branch was taxable under the provisions of Article 5 and 7 of Double Taxation Avoidance Agreement (DTAA), that the assessee was required to deduct tax at source on these payments as envisaged by the provisions of section 40(a)(i) of the Act. Finally, he disallowed the claim of the assessee amounting to Rs. 37.79 Crores paid under the Head arrangers fees. 2.1 Assessee preferred an appeal before the(First Appellate Authority) FAA. After considering the submissions of the assessee and the assessment order he held that commission/fees of Rs. 5. 28 Crores for acting as the collecting bank for IMD Programme had been offered to tax in India, that arrangers' fees of Rs. 31.72 Crore was paid to the H.O./overseas branches was not offered for taxation, that out of said amount Rs. 30.4 Crores had been paid to Fardan Trading Est for procuring the deposits, that Fardan Trading Est was an Indian entity incorporated for Abu Dhabi, that assessee bank had no shareholding in Fardan Trading Est, that Rs. 25.78 lacs were paid to certain customers from whom deposits were procured by Head Office/overseas branches, that certain other expenses on account of staff cost had been incurred by th....
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....ub-arrangers under the provisions of the Act, there remains no need to examine the taxability or otherwise of this amount in their hands under the respective Double taxation avoidance agreements. In that view of the matter, we are of the considered opinion that the learned CIT(A) was justified in reversing the AO's order insofar as the applicability of section 40(a)(i) is concerned. Consequently, the ground raised by the Revenue fails". Respectfully following the order of coordinating bench and considering the fact that issues involved in both the cases are similar, we decide ground No. 1 against the AO. 3. Ground No. 2 is about finding given by the FAA with regard to exemption claimed by the assessee-bank u/s. 10 of the Act. During the assessment proceedings, AO found that assessee had earned exempt income of Rs. 3.22 Crores under the Heads 'Interest from tax free bonds' (3.01 Crores) and' UTI dividend' (Rs. 21.78 lacs), that the above receipts had been claimed as exempt u/s. 10(33) and 10(15) of the Act. As per the AO, net income earned out of such receipts; not the gross receipts; were exempt u/s 10(15) and 10(33) of the Act. He further held that assessee h....
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....he AO for the next financial year, as stated earlier. Grounds of appeal filed by the AO read as under: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that in the absence of any nexus of the investment in bonds with borrowed funds, no disallowance of interest can be made merely for the reason that the assessee has incurred interest expenditure on certain borrowing. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the disallowance made of Rs. 2,73,40,494/- being the interest expenditure set off against the interest income. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of wealth tax payment of Rs. 1,05,000/-while computing the book profit u/s.115JB. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the disallowance of Rs. 5,00,00,000/- on account of provision for bad debts made while computing the book pr....
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.... The appellants pray that the AO be directed accordingly. The appellants crave leave to add to, amend, alter, vary, omit or substitute the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as they may be advised." Following Additional Grounds were also filed by the assessee : "Appellant prays that the provisions of section 115JB should not be applicable as the appellant is a bank. The appellants crave leave to add, to amend, alter, vary, omit or substitute the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as they may be advised." 6. For the AY under consideration, assessee had filed its return of income on 31.10.02 showing Nil income, whereas profit as per section 115JB was shown at Rs. 7.56 Crores. Assessment was finalised by the AO on 28.02.2005 u/s.143(3) of the Act determining the total income of the assessee at Rs. 2.92 Crores under normal provisions and at Rs. 12.77 Crores u/s.115JB of the Act. 6.1 First two ground of appeal filed by the AO are about ap....
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....e-cast the profit computed as per the books, that he could not make any adjustment with regard to the H.O. Expenses. 7.2 Before us, DR relied upon the order of the AO.AR submitted that similar issue had arisen for the earlier AYs in assessee's own case, that the Tribunal had decided the issue in favour of the assessee vide its order dated 28.9.2011. He further submitted that additional ground filed by him for the assessment order under consideration was also about the computation to be made u/s 115JB of the Act. He referred to the order delivered by the Mumbai ITAT in the case of Krung Thai Bank PCL (133 DTJ 435). 7.3 We have heard the rival submissions and perused the material before us. We find that while deciding the appeal for the AY 2001-02 (ITA/5024/Mum/2010 and CO-74/Mum/2011) similar issue was discussed by the Tribunal as under:- "8. In the cross-objection filed by the assessee it was contended that MAT provisions are not applicable to a banking company and in this regard relied upon decision of the ITAT, Mumbai Bench in the case of Krung Thai Bank PCL v. Joint Director of Income-tax (International Taxation) [2010] 133 TTJ 435 &n....
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....ed upon the order of the AO and FAA. 8.3 We have heard the rival submissions and perused the material available on record. We find that in the appeal decided by the Tribunal for AYs.1995-96 to 2000-01 similar issue was discussed and decided in favour of the assessee. Tribunal has decided the issue as under: "17. In Ground No.1 assessee has challenged the restriction of deduction for head office expenses by applying the provisions of sec. 44C of the Act as against the assessee's claim that the entire amount of Rs. 39,47,623/- allocated to the Indian branches should be allowed as deduction as per provision of Article 7(3) of India-UAE DTAA. 18. This issue has already been decided in favour of the assessee in the aforesaid appeal for the Assessment Year 1995-96 in ITA No.3462/M/2010. The finding given in the above appeal applies mutadis-mutandis in this ground also. Thus, Ground No. 1 as raised by the assessee stands allowed." Respectfully following the order for the earlier years, we decide the ground no. 1 in favour of the assessee. 9. Ground No.2 is about applicability of tax rate. While deciding the tax liability of the as....