TaxTMI 
TaxTMI 
2014 (4) TMI 733
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.... the disallowance of Rs.35,17,964/- made under Section 40(a)(ia) of the Act. 3. The appellant prays that the order of Ld.CIT(A), Mumbai on the above grounds be set aside and the order of the Assessing Officer be restored." 2. Rival contentions have been heard and record perused. Facts in brief are that assessee company is incorporated in Japan and having business operation in India from 1996 through a branch office in Mumbai. While framing assessment under Section 143(3), the AO disallowed interest paid to head office amounting to Rs.35,13,009/- under Section 40(a)(ia). The AO also added Rs.90,77,349/- being interest earned by head office. The AO also disallowed head office expenditure of Rs.47,65,429/-, which was claimed by the assessee under Section 44C of the I.T.Act. 3. Disallowance of Rs.47,65,429/- under Section 44C was made by the AO on the plea that expenditure has not been actually incurred by the assessee branch office in India. The AO further stated that these expenditures were not debited in the books of account of branch office and no entry at all is made in its books of accounts, however, same has been claimed as expenditure in the statement of income only. ....
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....the branch in India. The AO's objection to the effect that expenditure was not debited in the books of accounts of India branch, is not relevant in accordance with the law laid down by the hon'ble Supreme Court in the case of Kedarnath Jute Mills Company Ltd., 82 ITR 360. Thus, there is no requirement for raising debit note or voucher by the head office on the branch for claiming deduction under Section 44C of the I.T. Act. The findings recorded by the CIT(A) at para 5.5 has not been controverted by the learned DR by brining any positive material on record. Accordingly, we do not find any infirmity in the order of CIT(A) deleting the disallowance of expatriate salary. 6. During the course of assessment, the AO also observed that assessee has debited an amount of Rs.81,69,614/- as an expenditure on account of payment of interest to the head office, which also included payment of Rs.35,13,949/- remitted without withholding of tax. The AO invoked provisions of Section 40(a)(ia) and disallowed Rs.35,13,949/-. 7. By the impugned order, CIT(A) allowed assessee's claim after having following observations :- 6.18 I have gone through the issue. Branch or PE will be considered as if....
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....The Revenue is in appeal against order of CIT(A) in deleting the disallowance made under Section 40(a)(ia). We have considered rival contentions and found that disallowance has been made by the AO on the plea that branch office in India has been treated as permanent establishment and has filed return of income as per IT Act. The AO observed that although the branch office is an extension of head office, but it is located in India, tax jurisdiction, as per Article 5 of DTAA between India and Japan PE includes the branch office. The AO further observed that assessee has permanent establishment in the form of branch office, therefore, as per Article 7 of DTAA, provides permanent establishment will be taxable in India finally the AO treated the head office and branch office as two different entities as per the domestic law as well as DTAA, therefore, disallowed the interest payment for non-deduction of tax under Section 40(a)(ia). We found that issue is squarely covered by the decision of the ITAT Special Bench in the case of ABN Amro Bank, 97 ITD 89. Recently the issue is also dealt by the ITAT Special Bench at Mumbai in the case of Sumitomo Mitsu Banking Corp. 136 ITD 66 (Mum)(SB), w....
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....which would have indicated to the assessee company that the appeal was not completely allowed by the CIT(A). 11. On the other hand, learned Senior DR opposed the condonation of delay and submitted that assessee has not fully explained the substantial delay in filing the appeal. Reliance was also placed on the decision of the coordinate bench in the case of ACIT Vs. Petroleum India International, decided in ITA No.8086/Mum/2003 vide order dated 28-9-2012, wherein it was held that onus on the assessee to explain to the Tribunal about the "sufficient cause" for the delay and the Tribunal should be satisfied about the said sufficient case. It is true that the words "sufficient cause" for not filing the Cross Objection within the period of limitation, no doubt is to be applied in a reasonable manner but depending upon the facts and circumstances of each case. Party has to give satisfactory explanation. 12. We have considered rival contentions and found that issue taken by the assessee is covered in favour of the assessee by the order of the Tribunal in assessee's own case in the immediately preceding year. With regard to the delay in filing appeal, we have considered the rival sub....
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.... 798 had observed that inordinate delay calls for cautions approach. This means there should be no malafide or dilatory tactics. "Sufficient cause" should receive liberal construction to advance substantial justice. 14. The Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst. Katiji: 167 ITR 471 observed as under: "3. The legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits. The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the others courts in the hierarchy. 15. Furthermore, the Hon'ble Supreme Court in the case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 253 ITR 798 held that....