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2024 (11) TMI 152
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....State Bank Of India (Assessee/Appellant) and The Additional Commissioner Of Income Tax - 2 (2), Mumbai (The AO) against appellate order passed by The Commissioner Of Income Tax (Appeals) - 5, Mumbai [ The ld. CIT (A) ] dated 30/3/2013 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) of The Income Tax Act, 1961 (The Act) dated 20/3/2018 was partly allowed and therefore both the parties are aggrieved and are in appeal before us. 4) ITA number 3868/M/2013 is filed by the assessee wherein following grounds of appeal are raised:- 1. The learned CIT (A) erred in upholding the action of the assessing officer in taxing the deferred payment guarantee commission on receipt basis, without appreciating that such commission relates to subsequent years. 2.1 The learned CIT (A) erred in confirming the action of the assessing officer in making the disallowance under section 14 A to the extent of Rs. 311,976,518/- as under: - 0.5% of average investments (including subsidiaries) Rs. 30,84,14,003 and 74/- Interest expenditure in foreign currency loans Rs. 3,562,144 2.2 The learned CIT - A erred in holding that the appellant's contention that ....
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....ax treaty. 7.2 The learned CIT - A erred in holding that the ground of appeal is not maintainable is no claim was made in the original/revised return or during the course of assessment proceedings. 5) Identical grounds are raised in the appeal of the assessee in ITA number 4105/M/2014 for assessment year 2007 - 08. 6) The learned AO in ITA number 4952/M/2013 has raised following grounds of appeal:- 1. The order of CIT (A) is opposed to law and facts of the case. 2. on the facts and circumstances of the case and in law, the learned CIT (A) has erred in deleting the disallowance of Rs. 62.09 lakhs incurred by the assessee on reservation of seats in the schools for the children of the bank officers without appreciating that the amount was not incurred bullion are usually for the purposes of its business. 3. (a) on the facts and circumstances of the case and in law, the learned CIT A has erred in holding that no disallowance under section 14 A with rule 8D (2) (ii) is called for, thereby granting the relief to the assessee, overlooking to the fact that the AO had correctly made the disallowance, as the assessee could not establish the Nexus between its own funds and investmen....
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....was allowed to that extent only. The learned assessing officer has made several disallowances/additions/rejected the claims, therefore the assessee is aggrieved with the same, preferred an appeal before the learned CIT - A who disposed of the appeal of the assessee by appellate order dated 30/3/2013 allowing the appeal of the assessee partly. Therefore, both the parties are aggrieved and in appeal before us raising above stated grounds. 9) Facts are similar for assessment year 2007 - 08 also as agreed by the parties. 10) We first take up the appeal of the learned assessing officer. 11) Ground number 1 of the appeal is general in nature and therefore same is dismissed as no specific arguments were raised, but the issue of grievance was raised in subsequent grounds. 12) Identically ground number 1 in the appeal of the learned assessing officer for assessment year 2007 - 08 is also dismissed. 13) As per ground number 2 of the appeal, the learned assessing officer is aggrieved by the deletion of the disallowance of Rs. 62.09 lakhs incurred by the assessee on reservation of seats in the schools for the children of the bank officer. The brief facts of the issue show that the bank ha....
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....ure because it was incurred predominantly for benefit of staff. He further held that this issue has been decided in favour of the assessee by his predecessor in earlier assessment years 1999 - 2000, 2000 - 01, 2002 - 03, 2003 - 04, 2004 - 05 and 2005 - 06 in favour of assessee. He further held that the coordinate bench has also decided the issue in favour of the assessee for assessment year 1992 - 1993 to 1995 - 1996. Therefore, following the principles of judicial consistency, the disallowance made by the learned assessing officer was deleted. 16) The learned AO is aggrieved by the same. The learned special counsel and the learned CIT departmental representative argued that it may be appreciated that bank has spent money for the admission of children of senior bank officers. Such money is directly paid by the assessee to the schools. Such amount is not incurred for business purposes. It is not clear whether such amount paid by the assessee on behalf of the parents of such children is reflected as income of such parents or otherwise. It is also not clear whether such amount spent as a donation to the school or otherwise are eligible under Chapter-VI of the I.T.Act. Therefore, it m....
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....seat for the employees of the bank. He submits that it is not the liability/ burden of the parents which is shared by the assessee, but it is the expenditure incurred by the assessee to facilitate the education of the children of the staff and therefore such expenses are incurred wholly and exclusively for the purposes of the business of the assessee. 20) We have carefully considered the rival contention and perused the orders of the learned lower authorities. As we find that this issue is squarely covered in favour of the assessee by the decision of the honourable High Court in case of the assessee for assessment year 1996 - 1997 as per order dated 1 August 2016, which is not disputed by the revenue before us, therefore, we confirm the order of the learned CIT - A on this issue deleting the disallowance of Rs 62.09 Lakhs. Further argument raised by the learned departmental representative that whether such amount is chargeable to tax in the hands of the parents of the children i.e., employees and whether it is reflected as income of those parents or not is irrelevant for the reason that, we are supposed to examine whether the assessee has incurred this expenditure for the purposes....
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....6. d) Since the funds are not separately earmarked for each division, it can only be concluded that a common pool of funds, which is mainly in the nature of borrowings, is available to the different divisions for carrying on the business activity. The investment in securities is carried on by the Treasury division, while Foreign Exchange advances were made by the international division. The various business activities of the assessee are clearly demarcated, however there is no separate demarcation of funds. e) Therefore, the principles laid down in the decision of the honourable Supreme Court in Rajasthan warehousing versus CIT [242 ITR 450 ] that when all venture carried on by the assessee do not constitute one individual business, the principle of apportionment of expenditure will apply. The same principle has been laid down by the Supreme Court in case of waterfall Estates Ltd versus CIT [219 ITR 563]. 24) The learned assessing officer therefore considered the submission made by the assessee dated 4/3/2008 that there are cost free funds available with the bank in the form of capital, reserve and surplus, current account balances and profit of the year which can be linked to....
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....lowances. Assessee also submitted that it has the share capital of Rs. 526 crores, reserve and surplus of 27,117 crores and current account balances on which no interest is payable of Rs. 67,995 crores along with the profit of the current year of Rs. 40 406 crores. Against this the average investment is only Rs. 6168 crores. The learned CIT - A considered the above explanation and found that in earlier year for assessment year 2003 - 04 to 2005 - 06, this issue was decided and disallowance out of only expenses was made. Based on this he computed the disallowance of Rs. 311,976,518/-. Against this both the parties are in appeal before us. 27) The learned AO challenging the deletion of the disallowance of Rs. 3,502,060,685/- and assessee is challenging the sustenance of disallowance to the extent of Rs. 31.19 crores as per ground number 2 of the appeal of the assessee. 28) The learned departmental representative vehemently submitted that:- i. It may be appreciated that the assessee has earned exempted income from the mixed funds used for investment. It is a matter of fact that assessee is engaged into the activity of banking. The funds available with the bank belong to the accoun....
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.... and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those shares by production of materials that those were acquired from the funds available in the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan, even for instance, five or ten years ago, it is for the assessee to show by the production of documentary evidence that such loaned amount had already been paid back and for the relevant assessment year, no interest is payable by the assessee for acquiring those old shares. In the absence of any such materials placed by the assessee, in our opinion, the authorities below rightly held that proportionate amount should be disallowed having regard to the total income and the income from the exempt source. In the absence of any material disclosing the source of acquisition of shares which is within the special knowledge of the assessee, the assessing authority took a most reasonable approach in assessment." 27. We have already stated as to how the two divergent opinions have emerged from different High Courts and the respective reasons in sup....
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....he aforesaid finding of fact, the High Court has dismissed the appeal of the assessee observing as under: "In the present case, after examining the balance-sheet of the assessee, a finding of fact has been recorded that the funds utilized by the assessee being mixed funds, therefore, the interest paid by the assessee is also an interest on the investments made. Such being a finding of fact, we do not find that any substantial question of law arises for consideration of this Court." After going through the records and applying the principle of apportionment, which is held to be applicable in such cases, we do not find any merit in Civil Appeal No. 1423 of 2015, which is accordingly dismissed". iv. Further, it is submitted that when the assessee claims that its own funds were used for investment, the assessee has to prove that on the date of such investment interest free funds were available with the assessee and out of such interest free funds the investment was made to earn exempt income. The reliance is placed on the decision of Hon'ble Mumbai Tribunal in the case of HDFC bank Ltd Vs DCIT (ITA No. 3465/Mumbai/2012 and ITA No. 1795/Mumbai/2014). For the sake of ready referenc....
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.... making investment would reflect as under:- LIABILITIES AMOUNT ASSETS AMOUNT Capital 1,00,000 Furniture 50,000 Loan funds 10,00,000 Office advance 50,000 Investments 10,00,000 Total 11,00,000 Total 11,00,000 If one examines the above Balance sheet, he can easily conclude that the investments have been made out of loan funds. Let us further elaborate this matter. Let us assume that the assessee has made a profit of Rs. 20.00 lakhs during the year under consideration. Then the Balance Sheet at the yearend would reflect as under: - LIABILITIES AMOUNT ASSETS AMOUNT Capital 21,00,000 Furniture 50,000 Loan funds 10,00,000 Investments 10,00,000 Current assets 20,00,000 Office advance 50,000 Total 31,00,000 Total 31,00,000 If the contention of the assessee is accepted, then it would appear that the Investments have been made out of Capital (own funds) only, since the own funds exceeds the amount of investment. A comparison of both the tables would show that the comparison of own funds & interest free funds vis-a-vi....
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....learned ITAT favoring the assessee's. 28. The above conclusion is reached because nexus has not been established between expenditure disallowed and earning of exempt income. The respondents as earlier noted, have failed to substantiate their argument that assessee was required to maintain separate accounts. Their reliance on Honda Siel (supra) to project such an obligation on the assessee, is already negated. The learned counsel for the revenue has failed to refer to any statutory provision which obligate the assessee to maintain separate accounts which might justify proportionate disallowance. 29. In the above context, the following saying of Adam Smith in his seminal work - The Wealth of Nations may aptly be quoted: "The tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid ought all to be clear and plain to the contributor and to every other person." Echoing what was said by the 18th century economist, it needs to be observed here that in taxation regime, there is no room for presumption and nothing can be taken to be implied. The tax an individual or a corporate is required to....
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.... Co Ltd in ITA number 1075/2014. It was the claim of the learned authorized representative that no disallowance is required under rule 8D (2) (ii) when the assessee has sufficient own fund is covered by the decision of the coordinate bench in assessee's own case for assessment year 2009 - 10 in ITA number 3645/M/2016 and ITA number 4564/M/2016 dated 6 June 2023. Therefore, it was submitted that no disallowance of interest could have been made which is rightly deleted by the learned CIT - A. 31) The learned authorized representative further submitted that the assessee has challenged the same issue in ground number 2 of the appeal wherein the learned CIT - A has upheld the disallowance to the extent of Rs. 311,976,518/- under section 14 A of the act. He submitted that the disallowance in case of Bank under section 14 A could not have been made based on the decision of the honourable Supreme Court in case of Max opp investments Ltd versus CIT (2018) 402 ITR 640. He further relied on the decision of honourable Delhi High Court in case of principal Commissioner of income tax versus Punjab and Sindh bank in ITA number 904 and 906/2019, MUFC bank Ltd versus ACIT of the coordinate ben....
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.... for assessment year 2006 - 2007 and 2007 - 2008 wherein it is specifically shown that no new investments have been made during the assessment year 2006 - 07. Even otherwise it was stated that if only those categories of investments are to be considered where there is an increase as compared to assessment year 2005 - 06, that would still amount to iron and 5010 crores as the cash flow of the bank during the current year is Rs. 45,909 crore, it is evident that the bank had sufficient own funds to make investments during the year. He further stated that though the above statement includes all the investments whether from that any exempt income is on during the year or not are included but if there is any disallowance under section 14 A, such investments must be excluded from which no exempt income is earned during the year. He accordingly demonstrated that the bank had sufficient own interest free funds to make the investments during the year. 37) In view of above facts, he submitted that there could not be any disallowance under section 14 A of the Act based on the above judicial precedents in case of the assessee itself which is also supported by the decision of the various high c....
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....disallowed 63.56 percentage of the exempt income under section 14 A of the act. Out of this 58.56 percentage is the interest expenditure disallowed and 5% is the administrative expenses disallowance. The learned CIT - A sustained the disallowance of 0.5% of the average investment resulting into sustenance of such disallowance of Rs. 311,976,518/-. 40) The issue here is bank has sufficient own interest free funds then the amount of investment from which tax-free income is earned during the year, therefore, no disallowance on account of interest can be made in the case of a bank under section 14 A of the act. This issue has already been decided by the honourable Supreme Court in case of South Indian bank Ltd versus CIT [2021] 130 taxmann.com 178 (SC)/[2021] 283 Taxman 178 (SC) wherein it has been held as under:- "7. At outset it is clarified that none of the assessee banks amongst the appellants, maintained separate accounts for the investments made in bonds, securities and shares wherefrom the tax-free income is earned so that disallowances could be limited to the actual expenditure incurred by the assessee. In other words, the expenditure incurred towards interest paid on funds ....
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....ed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001." 12. The ....
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....estimation of a proportionate figure. For accepting such a proposition, it would be helpful to refer to the decision of the Bombay High Court in Pr. CIT v. Bombay Dyeing & Mfg. Co. Ltd. [IT Appeal No. 1225 of 2015, dated 28-11-2017], where the answer was in favour of the assessee on the question, whether the Tribunal was justified in deleting the disallowance under section 80M of the Act on the presumption that when the funds available to the assessee were both interest free and loans, the investments made would be out of the interest free funds available with the assessee, provided the interest free funds were sufficient to meet the investments. The resultant SLP of the Revenue challenging the Bombay High Court judgment was dismissed both on merit and on delay by this Court. The merit of the above proposition of law of the Bombay High Court would now be appreciated in the following discussion. 18. In the above context, it would be apposite to refer to a similar decision in CIT v. Reliance Industries Ltd. [2019] 102 taxmann.com 52/261 Taxman 165/410 ITR 466 (SC), where a Division Bench of this Court expressly held that where there is finding of fact that interest free funds avail....
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...., argues that there is no finality on the issue of disallowance, when mixed funds are used. On this aspect, since the issue is pending before a larger Bench, comments from this Bench may not be appropriate. However, at the same time it is necessary to distinguish the facts of present appeals from those in SA Builder Ltd. Tulip Star Hotels Ltd.'s case (supra). In that case, loans were extended to sister concern while here the Assessee- Banks have invested in bonds/securities. The factual scenario is different and distinguishable and therefore the issue pending before the larger Bench should have no bearing at this stage for the present matters. 22. The High Court herein endorsed the proportionate disallowance made by the Assessing Officer under section 14A of the Income-tax Act to the extent of investments made in tax-free bonds/securities primarily because, separate account was not maintained by assessee. On this aspect we wanted to know about the law which obligates the assessee to maintain separate accounts. However, the learned ASG could not provide a satisfactory answer and instead relied upon Honda Siel Power Products Ltd. v. Dy. CIT [2012] 20 taxmann.com 5/206 Taxman 33....
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....een incurred in relation to the income which is includible in total income that has to be disallowed. If an expenditure incurred has no causal connection with the exempted income, then such an expenditure would obviously be treated as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income." Adverting to the law as it stood earlier, this Court rejected the theory of dominant purpose suggested by the Punjab & Haryana High Court and accepted the principle of apportionment of expenditure only when the business was divisible, as was propounded by the Delhi High Court. Finally adjudicating the issue of expenditure on shares held as stock-in-trade, the following key observations were made by Justice Sikri: "50. It is to be kept in mind that in those cases where shares are held as "stock-in-trade", it becomes a business activity of the assessee to deal in those shares as a business proposition. Whether dividend is earned or not becomes immaterial. In fact, it would be a q....
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....f fact regarding such expenditure being incurred for earning exempt income is necessary. The relevant portion of Justice Gogoi's judgment reads as follow: "36. ......... what cannot be denied is that the requirement for attracting the provisions of section 14-A (1) of the Act is proof of the fact that the expenditure sought to be disallowed/deducted had actually been incurred in earning the dividend income............." 25. Proceeding now to another aspect, it is seen that the Central Board of Direct Taxes (CBDT) had issued the Circular no. 18 of 2015 dated 2-11-2015, which had analyzed and then explained that all shares and securities held by a bank which are not bought to maintain Statutory Liquidity Ratio (SLR) are its stock-in-trade and not investments and income arising out of those is attributable, to business of banking. This Circular came to be issued in the aftermath of CIT v. Nawanshahar Central Co-operative Bank Ltd. [2007] 160 Taxman 48/289 ITR 6 (SC), wherein this Court had held that investments made by a banking concern is part of their banking business. Hence the income earned through such investments would fall under the head Profits & Gains of business. The....
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....n and nothing can be taken to be implied. The tax an individual or a corporate is required to pay, is a matter of planning for a taxpayer and the Government should endeavour to keep it convenient and simple to achieve maximization of compliance. Just as the Government does not wish for avoidance of tax equally it is the responsibility of the regime to design a tax system for which a subject can budget and plan. If proper balance is achieved between these, unnecessary litigation can be avoided without compromising on generation of revenue." 41) Now therefore there cannot be any interest disallowance in the hands of the bank which has sufficient own / interest free funds more than the amount invested in the stock securities earning tax free income. In view of this even in absence of separate books of accounts, even in absence of showing direct Nexus of the funds, no interest disallowance could have been made in the hands of the assessee under section 14 A of the act. 42) Now the issue comes with respect to the disallowance of administrative expenditure for earning the exempt income. We find that in the case of the assessee for assessment year 2005 - 06 the coordinate bench in its o....
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....crued from the last due date of payment of interest to the date securities are sold is broken period interest income recognized by the banks to the profit and loss account as income. Thus, when securities are purchased, any broken period Interest expenditure is debited to the profit and loss account and when securities are sold, such broken period interest income is credited to the profit and loss account. 46) It is stated that assessee has debited Rs. 5,152,157,074/- as broken period interest paid on purchase of securities and treated the same as revenue expenditure. Assessee has also credited as income an amount of Rs. 12,496,589,527/- on account of broke period Interest received on sale of securities. Assessee has claimed this broken period interest paid as expenditure allowable in the year irrespective whether the securities are sold during the year or carried forwards as closing stock to next year. The contention is that the bank deals in securities and these securities are the stock in trade of the bank. The interest is paid therefore incurred for investments and it is allowable as revenue expenditure. Since the bank has consistently followed the system, hence, it has no imp....
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....3 - 04 the learned CIT - A following the decision of the honourable Bombay High Court in case of American Express international banking Corporation (supra) and honourable Supreme Court in case of Citibank NA has deleted the above addition. Further in assessee's own case for assessment year 91 - 92 to 94 - 95 the coordinate bench has also allowed the claim of the assessee. 50) The revenue has challenged this disallowance deleted by the learned CIT - A and argued that CBDT vide Instruction No.17/2008 dated 26-11-2008 (file No.228/3/2008-ITA-III) has instructed that where an assessee bank purchases securities under capital investment at a price inclusive of any accrued interest, then entire purchase consideration is in the nature of capital outlay. Therefore, any interest element included in the purchase consideration is not allowable as expenditure against income accruing on these securities. A correct method, therefore, would be to link broken period interest payments on securities to the nature of securities as determined for the purpose of allowing depreciation on investment. The broken period interest linked to capital investment (held to maturity category) would not be allo....
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....e assessee has credited broken period interest in respect of some other securities, it would not justify debiting the broken period interest against book profit in anticipation of future profit of following years. 54) The learned departmental representative also gave example that if the assessee buys two securities for Rs 102/- each out of which Rs. 4/- is broken period Interest, one security sold on first March and on which broken period interest Rs. 4 is realized and another security remains unsold on which to 31st of March interest of Rs. 5 accrues in the books of account, the assessee is crediting income of Rs. 5 accrued on unsold security and broken period interest received on securities order to the extent of Rs 4/-. Thus, the revenue corresponding to both sold and security lying in the closing stock is being realized in the books of account however in the computation of income the assessee has reduced income of Rs. 5 accrued on unsold security. The accrued interest of Rs. 5 also include Rs 2/- paid as broken period interest on purchase of Unsold security. The broken period interest received credited by the assessee is in respect of securities which have been sold and it has....
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....ncy, the issue must be decided in favour of the assessee. 58) We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that identical issue arose in the case of the assessee bank itself wherein the honourable Telangana High Court has decided this issue in CIT versus Bank of Hyderabad [ 146 taxmann.com 355] wherein identical question was admitted and decided as under:- "4. However, we find from the appeal memo that appellant has proposed the following questions as substantial questions of law: i. Whether on the facts and in the circumstances of the case, Tribunal was justified in holding that interest paid by the assessee on purchase of securities constituting stock-in-trade but paid for the broken period is allowable as a deduction? ii. Whether on the facts and in the circumstances of the case, assessee is entitled to claim deduction of interest paid on purchase of securities constituting stock for the broken period till the date of acquisition in terms of Section 37 of the Act? 5. Respondent is an assessee under the Act having the status of a banking company. For the assessment year 1998-99, it filed return of inco....
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....owable deduction in the hands of the assessee. Tribunal held that admittedly assessee had purchased the securities to hold them as stock-in-trade. Therefore, the interest paid for the broken period is allowable as a deduction. 11. Mr. J.V.Prasad, learned Standing Counsel, Income-tax Department for the appellant has placed before us the two-Judge Bench decision of the Supreme Court in Vijaya Bank Ltd. (supra). In that case, assessee had purchased securities. It was contended that the price paid by the securities was determined with reference to their actual value as well as the interest which had accrued on them till the date of purchase. But Supreme Court noted that whatever was the consideration which prompted the assessee to purchase the securities, the price paid for them was in the nature of a capital outlay and no part of it can be set off as expenditure against income accruing on those securities. Relying on the said decision, he further submits that claim for deduction can be sustained only when an assessee is in a position to show that any reasonable expenditure had been incurred for the purpose of realizing the interest on securities. 12. Mr. Prasad has also placed rel....
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....explained by the Bombay High Court in American Express International Banking Corpn. (supra) in the following manner: "6. Before coming to the facts of the case, a short preface needs to be mentioned. This preface explains the concept of broken period interest. Every bank is required to maintain Statutory Liquidity Ratio (hereinafter referred to as "SLR"). For that purpose, every bank subscribes to Government securities. One such security is known as SGL (Subsidiary General Ledger). This ledger is maintained in the Public Debt Office in the Reserve Bank of India. Every bank is required, as a part of banking business, to subscribe to this loan. This loan/SGL is also transferable like any other security. In this case, for example, we are concerned with 4.75 per cent. Government of India Loan, 1980, f. v. Rs. 5 lakhs. On the SGL, the Reserve Bank of India pays half yearly interest. In the case of the said 4.75 per cent. Government of India Loan, 1980, f. v. Rs. 5 lakhs, the Reserve Bank of India was required to pay half yearly interest on May 12, 1976, and November 12, 1976. The Reserve Bank of India pays interest on due dates on such securities to the holders of the securities, ever....
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....ays interest to the holder on the balances in a security if in its books the said security stands in the name of that holder on the due date for payment of interest. The above exercise, if we may say so, is a part of the banking business. However, after so subscribing, the banks are free to deal with such securities like any other trader. Therefore, there are two activities involved - one of subscribing to the loan and the other is trading. 18. One of the questions before the Bombay High Court was whether broken period interest payment by the assessee was allowable as a revenue expenditure under the head 'income from business or profession'? While answering this question, Bombay High Court examined the decision of the Supreme Court in Vijaya Bank Ltd. (supra). 19. In Vijaya Bank Ltd. (supra), during the assessment year under consideration, Vijaya Bank had entered into an agreement with Jayalakshmi Bank Ltd. whereby Vijaya Bank took over the liabilities of Jayalakshmi Bank. It also took over the assets belonging to Jayalakshmi Bank. One of the two items taken over by Vijaya Bank represented interest which accrued on securities taken over by Vijaya Bank from Jayalakshmi B....
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....the said securities at the close of the year was an allowable deduction in the computation of profits of the assessee bank. Finally, in respect of the 4th question as to whether the Tribunal was justified in allowing the claim for deduction of interest paid for the broken period for acquisition of the securities till the date of such securities, Kerala High Court held that the said question was squarely covered by its earlier decision in CIT v. South Indian Bank Ltd. [1999] 105 Taxman 173/[2000] 241 ITR 374 wherein it was held that interest paid for the broken period would constitute allowable outgo in the hands of the assessee and was an admissible deduction in the computation of total income of the assessee (bank) under the head 'profits and gains of business or profession'. 23. Adverting to the facts of the present case, we find that it is the contention of the respondent that respondent had been holding its securities all along as stock-in-trade which is not in dispute. For successive assessment years, Revenue has accepted the fact that respondent had been holding the securities as stock-in-trade. Circular No. 665 dated 5-10-1993 of the CBDT has clarified the decision....
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.... not due as on 31st of March 2006 of Rs. 34,745,979,218/-. It was further stated that interest accrued but not due as on 31/3/2005 which was offered for tax as it has become due in assessment year 2006 - 07 of Rs. 4,432,896,608/-. Thus, due to this the income of the assessee stood enhanced by amount of Rs. 5,686,917,390/-. Therefore, assessee stated that it is the practice of the bank to account for the interest on securities on accrual basis while arriving at the book profit however as per note number 26 of the return of income it was claimed that like in earlier years the interest on securities may be taxed on due basis. The appellant relied on the decision of the CIT - A in assessment year 1997 - 1998 and 1998 - 1999 wherein the learned CIT (A) has held that interest on securities is taxable on due basis. This explanation of the assessee was not considered and therefore assessee challenged the same before the learned CIT - A. 63) The learned CIT - A following the decision of the Union Bank of India ITA number 8817/B/22 held that if the income has not been found to have accrued to the assessee in the sense that assessee did not have a right to receive the same, it cannot be brou....
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.... 36. The learned departmental representative vehemently stated that as per the accounting system of the assessee in accounting, interest accrued which is in accordance with the accounting standards and are based on sound and acceptable accountancy principles, interest income has accrued to him, by virtue of definition of 'total income 'provided under section 2 (45) they ought to have been part of 'total income' because they have been computed in the manner laid down in this act. It cannot be held that such income has accrued as per accounting standard employed by the assessee himself but has not been accrued for the scope of charging for taxation purpose as 'total income'. The learned departmental representative vehemently supported his argument based on paragraph number 5.1 of master circular of Reserve Bank Of India dated 2/7/2007 wherein it has been held that that the banks may book income on accrual basis on securities of corporate bodies/public sector undertakings in respect of which the payment of interest and repayment of principles have been guaranteed by the central government or State government provided interest is serviced regularly and as such not i....
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....er, in the income tax return assessee is showing only those interest income as income, which has 'accrued and due.' Thus, according to assessee the claim of the assessee is that for income tax only those interest which are accrued and due can only be considered as income. We find that concept of accrual cannot be different for different statutes unless there is specifically defined. Therefore, it is unusual that for drawing the profit and loss and balance sheet of the assessee, the income has accrued but for the purpose of income tax, it will accrue only when it becomes due. 'Interest accrued but not due' is the interest that has accumulated on a loan or investment but has not yet been paid by the borrower as due date for payment has not arrived. It is a feature of accrual accounting, which records accounting transactions when they occur, not when they are received. 69) Section 5 (1) (b) of The Act also does not support view of the assessee where it is provided that Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which accrues or arises or is deemed to accrue or aris....
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....revaluation of investments allowed by the learned CIT - A. The fact shows that the assessee has booked a total loss of Rs. 4,426,789,141/- on account of depreciation of securities on the last day of the financial year. As per the information furnished, it was found that this includes Rs. 12,799,950,899 on account of amortization of securities in 'held to maturity' category. The assessee was asked to explain why the loss on amortization should not be disallowed since held to maturity category investments are held long and should be carried at cost. The assessee furnished the circular dated 12/7/2005 of the reserve bank of India which lays down the rules regarding valuation of investment by the banks wherein the investment in held to maturity category should be carried at acquisition cost only. As the purchase price is higher than the face value, the premium is required to be amortized over the remaining period of the maturity of the security. The loss on evaluation of permanent security reflected in the bank's profit and loss account is on account of amortization of the premium paid while purchasing the securities. The learned AO questioned the above claim. 74) The assessee con....
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.... when the cost price is more than the face value, the loss is not booked in the year of sale but is spread over the period of holding. If the securities are held as investment, there is no question of elements of any amount till such time as they are sold or redeemed. Even if the securities are held as stock in trade the method of valuation of closing stock adopted in respect of securities in held to maturity category is cost price which is one of the two recognized methods of valuation. As the cost is constant, there is no question of deduction of any amount under the commercial principles even if held to maturity securities are accepted to be stock in trade of the assessee. Whatever losses suffered on sale of redemption of securities will constitute the loss of the year in which those securities are sold or redeemed. By claiming amortization, the assessee neutralizes the effect of valuing the securities in held to maturity category on cost price which is one of the two recognized methods of valuation of the closing stock. The learned AO further noted that for assessment year 1995 - 1996 the learned CIT-A decided this issue as per order dated 30/3/1999 holding that the premium amo....
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....1 August 2016, for assessment year 97 - 98 as per order dated 18 June 2019 and therefore the issue is squarely covered in favour of the assessee. 79) We have carefully considered the rival contention and perused the orders of the learned lower authorities. The claim of the assessee that in accordance with the guidelines issued by the reserve bank of India investments in held to maturity category should be carried at acquisition cost. In case the purchase price is higher than the face value, the premium should be amortized over the remaining period of maturity of the security. The bank as amortized the sum of Rs. 12,999,950,899/- being amortization cost of investment held in that bucket i.e., held to maturity [HTM]. No doubt the investments held by the assessee are trading securities therefore such amortization premium is claimed as allowable by relying on the decision of the honourable Bombay High Court in assessee's own case for assessment year 96 - 97 dated 1 August 2016 wherein the appeal of the revenue was dismissed on this count. Similarly for assessment year 97-98 also the honourable Bombay High Court as per order dated 18 June 2019 decided the issue in favour of the assesse....
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....act, the same cannot be allowed u/ s 40(A) (9) of the Act, Therefore, considering the facts and circumstances of the case and provision of the IT Act, the addition made by the AO may be upheld 83) The learned authorized representative vehemently submitted that the issue stands covered in favour of the assessee by the decision of the coordinate bench in case of ACIT versus GlaxoSmithKline pharmaceuticals (ITA number 444/M/2007) which has been upheld by the honourable Bombay High Court in ITA number 2232 of 2011. 84) We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that as this issue is squarely covered by the decision of the honourable Bombay High Court in case of ACIT versus GlaxoSmithKline pharmaceuticals Ltd which is not disputed by the revenue, ground number 3 do not survive and hence dismissed. 85) Ground number 7 of the appeal of the learned assessing officer for assessment year 2007 - 08 is with respect to the deletion of the disallowance made by the learned assessing officer under section 36 (1) (viii) of the act amounting to Rs. 2,630,783,918. 86) During the course of assessment proceedings for assessment....
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.... assessee's own case for the assessment year 2006 - 07 dated 26 June 2019 and further attention in this regard was also invited to the decision of the coordinate bench in the case of Union Bank of India versus ACIT reported in (2011) 16 taxmann.com 304. 89) We have carefully considered the rival contention and perused the orders of the learned lower authorities. According to provisions of section 36 (1) (viii) allows deduction in respect of any special reserve created and maintained by a financial Corporation which is engaged in providing long-term finance for industrial or agricultural development or development of infrastructural facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for specified activities, the deduction is amount not exceeding 40% of the profits derived from such business before making any deduction under this subsection. Now such deduction is available only to financial Corporation which shall include a public company and the government company, the claim of the revenue raised before us for the first time is that state bank of India does not qualify for this ....
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....ission a portion from the past. So, it was a dispute between the revenue and the assessee whether the deferred guarantee commission received during the year of Rs. 148,241,129/- accrue to the assessee as income during the year of receipt or over a period of deferred guarantee provided. In case of deferred payment guarantee, the commission is always received in advance. In case the guarantee is encashed after the period the same would in any case be a loss suffered in the course of business and the assessee would debit to the relevant account. The learned assessing officer therefore held that the amount of commission received is an income having accrued at the time the bank issues the guarantee. For this proposition he relied upon the decision of Kerala and development Finance Corporation versus CIT 266 ITR 245 holding that the right to receive the commission and the actual receipt of it happened during the relevant accounting period relating to the assessment year. Thus, the learned assessing officer treated the deferred guarantee commission received of Rs. 148,241,129/- as income of the assessee for the previous year. As the assessee has offered income of Rs. 176,806,013/- credite....
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....at the time of issuing the guarantee] or such income can be spread on the basis of the time for the period for which guarantee is persisting. 97) Revenue recognition policy of the bank as per accounting policy number 9.2 (a) wherein the commission other than the commission on deferred payment guarantee and government transactions) is recognized on realization basis. Thus, the deferred payment guarantee is recognized as income not on realization basis. We also do not find any revenue recognition policy with respect to commission on deferred payment guarantee in the annual accounts of the assessee. Therefore, those are accounted for on accrual basis as per policy number 9.1. 98) The decision of the coordinate bench in assessee's own case for assessment year 1984 in ITA number 2448/bomb/1988 (22 August 2006) in ground number 4 has discussed this issue and following the decision of the Calcutta High Court in case of Bank of Tokyo Ltd (71 taxmann 85) the issue was restored to the file of the learned assessing officer to decide afresh after taking into the decision into consideration. However, decision for the assessment year 2005 - 06 rendered on 22 March 2022 in ITA number 3685/M/201....
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....e year in which the loan amount was disbursed. Certain other decision relied by the learned Departmental Representative reiterate the same view. 102) We also find that Mumbai Bench of the Tribunal in the case of Dy. DIT (International Taxation) v. Chohung Bank [2010] 126 ITD 448 considered almost a similar case in which that the assessee bank gave guarantee for the period extending the close of the year. The question arose as to whether such commission should be considered for the period of guarantee or charged to tax in the year in which the guarantee was given. The Tribunal held that the entire commission accrued at the time of giving guarantee and no part of it can be spread to next year. 103) Accordingly, respectfully following the decisions of the tribunal in assessee's own case for the earlier years, we find that the commission on deferred guarantee issued by the bank is chargeable to tax as and when deferred guarantee is issued and commission is received. Accordingly ground number 1 of the appeal is dismissed. 104) Ground number 2 for AY 2006-07 of the appeal is with respect to the disallowance of expense of Rs. 311,976,518 for earning exempt income by applying the pr....
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.... intention of the assessee is to reduce taxable income by claim of depreciation because mostly those assets which are released carry higher depreciation rate for income tax purposes. The bank gets higher depreciation to offset its tax liability and the lessee has to pay lower interest as some benefits obtained by the bank are passed on in the form of lower interest rates. The learned assessing officer examined the master lease agreement. He held that assessee did not assume any risk of ownership of these machineries. Therefore the learned assessing officer concluded that the claim of ownership of the bank of the leased assets cannot be accepted because the bank has paid for the cost of acquisition of the assets only at the instance of the lessee which the bank is ensured to recover irrespective of whatever happens to the asset and such payments were made only after the lease agreements were entered into as part of the indivisible transaction of ostensible purchase and lease. The bank did not accept the risk or loss of deterioration of the assets which is natural and essential ingredient of the ownership of the asset. The bank is rather ensure that it held the title to the asset as ....
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....65,480,537/- on such leased assets. Accordingly ground number 3 of the appeal of the assessee for assessment year 2006 - 07 and ground number 2 for assessment year 2007 - 08are dismissed. 112) Ground number 4 for AY 2006-07 of the appeal is with respect to the disallowance of write-off of bad debt is in respect of non-rural advances of Rs. 14,968,666,681/-. Identical ground number 5 is raised for assessment year 2007 - 08 wherein disallowance is with respect to nonrural advances of Rs. 1,775,300,977/-. 113) The facts are leading to the above issue is mentioned by the learned assessing officer at paragraph number 11 of his assessment order where from the fact shows that the assessee as per note number 13 attached to the return of income has claimed that the deduction should be allowed in respect of write-off of non-rural branch advances amounting to Rs. 14,968,666,681. 114) Note number 13 appended to the computation of total income placed at page number 6 - 7 of the paper books reads as under :- "13 - write-off of bad debts: - write-off of bad debts is allowable under the proviso to section 36 (1) (vii), which states as under:- "Provided that in case of an assessee to which....
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....bt is actually written off in the accounts of the bank the presence only debts arising out of non-rural advance is, the allowance thereof in the assessment is not affected, controlled, or limited in any way by the proviso to section 36 (1) (viii). Similar view was also of the honourable Kerala High Court in case of South Indian Ltd in 262 ITR 579. Accordingly, debtsthat is actually written of which are not arising out of the rural advances, are not affected by the proviso to clause (vii) and that only those bad debts which arise out of rural advances are to be limited in accordance with the proviso. 116) The learned assessing officer rejected the contention of the assessee based on the circular dated 464 dated 18/7/1986 wherein according to the learned AO it is clear that the provisions under section 36(1)(viia) is available both for rural and non-rural advances. However same has not been appreciated in the decision of the honourable Kerala High Court and the special bench against which the Department has filed the special leave petition. Accordingly, the claim of the assessee was dismissed. 117) On appeal before the learned CIT - A this issue is discussed at paragraph number 9. ....
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....rovide for deduction out of provision for bad and doubtful debts. It is a settled principle that if there is no provision for bad and doubtful debts in the books of accounts of the assessee, the deduction of provision under section 36(1)(viia) shall not be available to the assessee. The provision for bad and doubtful debts is created by the assessee in the books of accounts as per the Prudential norms prescribed by the reserve bank of India. As per such norms, the assessee categorizes its debts into different categories such as standard assets, substandard assets, non-performing assets and bad assets. On the basis of the provision created in the books of accounts for bad and doubtful debts as per the prudent norms of the RBI, the assessee is eligible for deduction of certain percentage of total income of the year in which such provision exists. Such deduction is available to the assessee for all advances including rural advances are nonrural advances. Therefore, it needs to be appreciated that the provisions of section 36(1)(viia) and 36(1)(viia) of the Act operates for different set of debts treatment in the books of accounts, however part of total loans and advances made by the b....
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....ance in provision for bad and doubtful debts account. 121) It was further submitted without prejudice that the assessee has arrived at an amount of bad debts actually written off to the eligible deduction under section 36(1)(viia) at Rs. 1496.86 crores. However, it is not clear how this amount was arrived at after adjusting the credit balance for provision for bad and doubtful debts in the books of accounts of the assessee. It is also not clear whether the assessee has actually written off this amount in the books of accounts of the assessee considering it irrecoverable. Therefore, may be verified and substantiated with documentary evidence as how such amount was computed as eligible deduction. In absence of such documentary evidence and method for accounting such amount, the deduction claimed by the assessee cannot be allowed. 122) The learned authorized representative submitted that the coordinate benches have decided this issue in its favour forced last several years and further it is also made from to consider the decision of the Catholic Syrian bank Ltd versus CIT (2012) 343 ITR 270 (SC), CIT versus CT Union Bank Ltd (2007) 291 ITR 144 (Madras), DCIT versus Karnataka bank Lt....
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....lar of CBDT number 665 dated 5/10/1993 wherein the board has clarified that the assessing officer should determine on the facts and circumstances of each case as to whether any particular security constitute stock in trade or investment considering the guidelines issued by the reserve bank of India in this regard from time to time. 126) Assessee submitted that that assessee valued each of the security at the end of year falling into the bracket of assets held for sale and held for trading after netting of classification wise depreciation and appreciation, computed script wise and provided format depreciation in each classification while ignoring that appreciation, as permitted by the guidelines issued by the reserve bank of India. This practice is consistently followed by the assessee for tax purposes. Accordingly, the depreciation of same is allowable to the assessee. It was also stated that these securities are stock in trade which are required to be valued at lower of cost or market value whichever is less, the assessee has followed the same and therefore it should be allowed in view of several judicial precedents. 127) The learned AO did not accept the argument of the assesse....
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....CIT DR submitted that assessee has not made such claim in the return of income. During the course of assessment proceedings letter dated 4 March 2008 was submitted wherein such claim was made. The learned CIT - A confirmed the action of the AO holding that the depreciation/appreciation in individual script wise shall be aggregated for each category of classification and thereafter only netted appreciation cell be allowed in the profit and loss account as per the guidelines issued by the reserve bank of India on valuation of securities and income recognition which is regularly followed by the assessee. He therefore submitted that there is no infirmity in the order of the learned lower authorities. 131) We have carefully considered the rival contention and perused the orders of the learned lower authorities. It is an admitted fact that there was no claim in the return of income by the assessee, the claim was made by filing a letter before the learned assessing officer, which was rejected by the learned lower authorities on merits. It is contested that the issue is decided in favour of the assessee in assessee's own case by the coordinate bench for several assessment years. Therefore....
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....decided in case of assessee by the coordinate bench wherein the issue was remanded back to the assessing officer for the purpose of verification for assessment year 2009 - 10 as per order dated 6 June 2023 and similarly for assessment year 2008 - 09 per order dated 3 February 2020. It was submitted that for assessment year 2005 - 06 (22 March 2022, assessment year 2003 - 04 (30 September 2021), for assessment year 2000 - 01 (6 March 2020), assessment year 96 - 97 (3 January 2014), assessment year 1997 - 1998 and 1998 - 1999 (29 April 2016) and for assessment year 99 - 2000 (31 January 2018). It was further stated that the learned CIT - A in assessee's own case for the assessment year 1996 - 1997 on exactly similar facts as decided the issue in favour of the bank as per order dated 1/7/2016. Further the learned assessing officer as per order dated 20th 8 December 2016 giving effect to the above order of the learned CIT - A wherein the AO was directed to follow the order of the coordinate bench, has granted relief for recovery of bad debts. Therefore, now this issue has been accepted by the revenue, decided by the coordinate bench in its favour, therefore the orders of coordinate ben....
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....s albeit deemed to be the profits as business income and accordingly chargeable to income tax in which such sum is recovered, irrespective of existence of such business. Therefore, it needs to be decided that whether the assessee has been allowed any deduction under section 36(1)(viia) of the act. The second aspect required to be examined is whether the assessee has recovered anything greater than the difference between the debt and the amount of deduction allowed under section 36(1)(viia) of the act. If such recovery is in excess of the difference between the debt and the amount allowed, such excess albeit deemed to be the profits in the year in which recovery is made. 137) The reliance is mainly on the decision of the Bangalore bench in case of state bank of Mysore in ITA number 647/Bangalore/2008. The coordinate benches in assessee's own case has also set-aside the issue back to the file of the learned assessing officer following the above decision of the coordinate bench in case of state bank of Mysore. 138) Therefore, it is imperative now to examine what that decision of the coordinate bench decided. According to paragraph number 9.4 of that decision it held that: - "9.4 W....
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.... (i) Whether the assessee-Bank has debited the amounts so recovered out of bad debts against Reserve created by virtue of section 36(1)(viia) of the Act ? (ii) Whether the amounts recovered against the bad debts have not exceeded the reserve so created ? (iii) Whether the amounts recovered against the bad debts have not been charged to profit & loss account of assessee-Bank as per the provisions of section 36(1)(vii). this issue is remitted back on the file of the Ld. Assessing Officer for the limited purpose only. The Ld. Assessing Officer is directed to ascertain the facts of the case with reference to books of account and to take appropriate action in conformity with our findings on the legal issue." 139) Therefore, in view of the above, it is crystal clear that it is for the assessee to first establish that what is the outstanding amount of that debt, whether out of such that any deduction has been allowed to the assessee under section 36(1)(viia) of the act, whether there is any recovery of debts subsequently from that account, what is the difference between the amount outstanding as at that date and the amount of deduction allowed as a provision to the assessee, ther....
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....2008) (300 ITR 1) (SC) vii. Pooja Bhatt versus DCIT (2008) 26 SOT 574 (MU M) viii. DCIT versus Mideast India Ltd (2009) 28 SOT395 (Delhi) ix. DCIT versus SRO Ltd (2011) (47 SOT139) (MU M) x. Bank of India versus Deputy Commissioner of income tax (2012) (27 taxmann.com 335) MUM) b) It was contested before him that the relevant tax treaty provided that such business income 'may be taxed' in a particular state in respect of the specified income and therefore the tax would only be chargeable by the other State. c) So, if an income is held to be taxable in foreign jurisdiction (Source state) under a treaty, unless there is a specific mention that it can also be taxed in the other jurisdiction (State of Residence), the State of Residence i.e., other tax jurisdiction does not have any power to tax the same. d) Thus, income of such foreign branches are covered by the tax treaty jurisdictions, where the power of taxing such income is given to those other tax jurisdictions, therefore, same cannot be taxed in the hands of the assessee in India. e) Assessee also submitted a chart where the foreign income earned by such foreign branches covered by various treaties entered into. ....
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....late proceedings or assessment proceedings with respect to the income earned by the assessee from foreign branches. The assessee also did not give the details of return of income filed in respect of jurisdiction where taxes paid as per the provisions of the act in such foreign countries, nature and character of the income accruing to the assessee and whether such income is taxable or exempted in foreign countries, details of tax paid and credit claimed in India, copies of relevant documents to prove that income accrued and considered for payment of taxation and return of income prepared and tax certificates or other related documents submitted before the AO for verification. None of such documentary evidence have been submitted by the assessee before the assessing officer, or before the CIT - A, or before the tribunal. Therefore, such claim cannot be entertained now. b) It is also not clear in which countries the assessee has earned such income. It is also not supported with documentary evidence such as name of countries, provision for taxation of income in such countries along with the Double Taxation Avoidance Agreement. Therefore, in absence of such documentary evidences to pr....
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....ted without prejudice that assessee made certain income from the banking operation in foreign countries. It may be appreciated that under the scheme of the law as it prevailed particularly in the light of provisions of section 90 (3) read with NOTIFICATION NO. 91/2008 [S.O. 2123(E)] [(F.NO. 500/82/2004-FTD-I)], DATED 28- 8-2008, entire global income of an Indian resident assessee was to be taxed in India and that where a double taxation avoidance agreement provided that any income of a resident of India be taxed in the other country, such income would be included in his total income chargeable to tax in India, in accordance with the provisions of the income tax act and relief would be granted in accordance with the method of elimination or avoidance of double taxation provided in such agreement. i) It was further stated that provisions of section 90A has prescribed the applicability of the double taxation avoidance agreement and further it is clarified by the board by notification number 90/2008 dated 28/8/2008 wherein 'may be taxed' was given a meaning to. Therefore, harmonious reading of the provisions of section 90, 90A and the above notification, it is clear that the assessee....
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....with the amount of income to be eliminated as per the relevant Double Taxation Avoidance Agreement. According to that statement the assessee has submitted the relevant Double Taxation Avoidance Agreement between India and Belgium, Bangladesh, Germany, South Africa, Oman, Japan, France and Singapore. The learned authorized representative also submitted that provisions of article 7 of business profits of each of the relevant Double Taxation Avoidance Agreement provides that tax 'may be' charged in a particular state in respect of specified income. Thus, it was submitted that it is implied that the other State would not charge taxi.e., India. Accordingly, once income is held to be taxable in a particular jurisdiction under a tax treaty, unless there is a specific mention that it can be taxed in the other jurisdiction, the other jurisdiction is denuded of its power to tax the same. Thus, it was submitted that profits of the above foreign branches which have the clause of 'may be taxed' in the other country and is taxed so in the other country, should be excluded from the total income of the assessee. 149) Assessee placed reliance on the coordinate bench decision in the case of Bank of....
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....f foreign taxes paid in accordance with the provisions of double taxation avoidance agreement with those countries but now, assessee cannot claim that such income should not enter into the computation of taxation of income according to the income tax act. 153) We have carefully considered the rival contention and perused the orders of the learned lower authorities. The simple issue involved in this ground of appeal is that the assessee has earned profit from its foreign branches in Belgium, Barry in, Sri Lanka, Bangladesh, Germany, Hong Kong, South Africa, US, Maldives, Omar, Obama's, Japan, France, Singapore, Australia, UK, China, Israel, Barry in and UAE. The total income earned by the assessee is Rs. 3,330,878,174. Out of the above branches the assessee has incurred losses in Hong Kong, Panama, UK and has paid taxes in Belgium, Sri Lanka, Bangladesh, Germany, South Africa, US, Maldives, Oman, Japan and France. The assessee has sought the income earned from Belgium Bangladesh, Germany, South Africa, Omar and former Japan, France and Singapore amounting to Rs. 3,101,210,083/- cannot be taxed in India. 154) In case of Tecnimont (P) Limited [2020] 116 taxmann.com 996 (Mumbai) the ....
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....n considered in paragraph number 14 of that decision and held that those are no longer valid after 1/4/2004. 157) The impugned assessment year before us is assessment year 2006 - 07 and 2007 - 08. Therefore, the assessee is not entitled for exclusion of the income of foreign branches from its tax computation but is only entitled to tax credit or exemption in accordance with those agreements. 158) The assessee was specifically asked to give the details of the Double Taxation Avoidance Agreement where assessee is claiming benefit of exemption, in all those agreements as per article 22 or article 23 or article 25 only the credit methods for elimination of Double taxation are provided. Therefore, assessee is entitled to only credit of foreign taxes paid. 159) Reliance on the decision of the coordinate bench by the learned authorized representative in case of bank of India [supra] does not help the case of the assessee as it pertains to assessment year 2003 - 04. The reliance placed on the decision of the honourable Bombay High Court in case of CIT versus bank of India (2015) 64 taxmann.com 215 also does not help the case of the assessee as it also pertains to assessment year 2003 - ....