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2014 (1) TMI 595 - ITAT MUMBAIDeletion of disallowance u/s 10(33) of the Act - Eligibility for exemption - Disallowance as interest expenditure – Expenses incurred for earning dividend on shares - Nexus between tax free income and interest bearing funds – Held that:- The decision in BNP Paribas SA, Versus Deputy Director of Income-tax (International Taxation)-3(2), & Others [2012 (8) TMI 329 - ITAT, MUMBAI] followed - the investments are made by the assessee form its own funds - The Hon'ble High Court of Judicature at Mumbai has upheld the order of the ITAT on the ground that the finding of fact that the investments were made out of assessee's own funds was not challenged – even revenue could not furnish any evidence to show that interest bearing funds were utilised for the purpose of making investments to earn tax free income – Decided against Revenue. Deletion made in respect of guarantee commission – Held that:- The Bench called upon the assessee to furnish the agreements which gave rise to commission in the year under consideration, i.e. for A.Y. 2001-02 and also the agreements for subsequent two years so that it can be compared and if the conditions are the same the order or the Tribunal as well as the order of the Hon'ble High Court can be followed - Copies of the agreements were not immediately available with both the parties – Matter remitted back to the AO to verify the agreements – Decided partly in favour of Assessee. Applicability of Rate of Tax to domestic companies – Held that:- The decision in BNP Paribas SA, Versus Deputy Director of Income-tax (International Taxation)-3(2), & Others [2012 (8) TMI 329 - ITAT, MUMBAI] followed – with the insertion of explanation in section 90 with retrospective effect from 01.04.1962 the matter decided in favour of Revenue and against the assessee. Interest paid to head office/overseas branches – Held that:- The decision in BNP Paribas SA, Versus Deputy Director of Income-tax (International Taxation)-3(2), & Others [2012 (8) TMI 329 - ITAT, MUMBAI] followed - interest paid to the head office of the assessee bank as well as its overseas branches by the Indian branch cannot be taxed in India being payment to self which does not give rise to income that is taxable in India as per the domestic law or even as per the relevant 'tax treaty' – Decided in favour of Assessee.
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