2016 (11) TMI 1600

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....nue urges only the following questions of law for our consideration :" (1) Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in holding that the expenses incurred on Information Technology of Rs. 14.99 crores by the Head office on and charged to the Indian Branch of the assessee was deductible under Section 37(1) of the Act without any restrictions contained in Section 44C? (2) Whether on the facts and circumstances of the case and in law the Tribunal was right in confirming the order of the Commissioner of Income Tax (Appeals) (CIT(A)) in allowing interest of Rs. 10.37 crores attributed to earning of tax exempt income without appreciating the finding given by the Assessing Officer....

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.....(1): (a) The grievance of the Revenue before us as formulated in the question is that the impugned order of the Tribunal has allowed the expenditure of Rs. 14.99 crores on Information Technology under Section 37(1) of the Act. This without having considered the restriction under Section 44C of the Act. (b) We find that the Commissioner of Income Tax (Appeals) (CIT(A)) has its order dated 1st March, 2004 disallowed the expenditure only on account of nonsatisfaction of Section 40A(i) of the Act i.e. failure to deduct tax at source. Besides the CIT(A) recording that the respondentassessee would not be entitled to allowance of the expenditure incurred on Information Technology even under Section 44C of the Act. (c) T....