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2018 (11) TMI 1949 - ITAT MUMBAIDisallowance u/s 14A r.w.r.8D - expenditure attributable to earning of exempt income - HELD THAT:- As could be seen from the facts on record, in the preceding assessment year the assessee contested the disallowance made u/s 14A of the Act r/w rule 8D on the plea that the investment in shares, etc., having been held as stock–in–trade no disallowance can be made under section 14A of the Act. However, while deciding the aforesaid claim of the assessee in assessment year 2011–12, vide [2018 (5) TMI 2167 - ITAT MUMBAI] the Tribunal has restored the issue to the Assessing Officer for fresh adjudication. In view of the above, we direct the Assessing Officer to decide the issue following the direction of the Tribunal in assessment year 2011–12 (supra) as well as the additional submissions made by the assessee in the impugned assessment year. While doing so, he must keep in view the ratio laid down in the decisions to be cited by the assessee. Needless to mention, before deciding the issue, the Assessing Officer must afford reasonable opportunity of being heard to the assessee. Accordingly, we restore the issue to the Assessing Officer for de novo adjudication. Ground is allowed for statistical purposes. Nature of expenses - Amortization of lease premium - AO after verifying the details available on record found that the aforesaid amount was paid on account of lease premium on various lease hold lands held by the assessee and concluded that it is in the nature of a capital expenditure - HELD THAT:- As could be seen, the claim of amortization of lease premium on lease hold land is a recurring dispute between the assessee and the Department from the preceding assessment year. While deciding the disputed issue in assessee’s own case for assessment year 2004–05 [2017 (7) TMI 1289 - ITAT MUMBAI] in ITA no.5977/Mum./2011, dated 26th July 2007, the Tribunal upheld the disallowance made by the Assessing Officer. The same view was reiterated by the Tribunal while deciding assessee’s appeal in ITA no.[2018 (5) TMI 2167 - ITAT MUMBAI] 4491/Mum./2016, dated 25th May 2018, for assessment year 2011–12. Respectfully following the consistent view of the Tribunal on the disputed issue in assessee’s own case as referred to above, we uphold the disallowance made by the Assessing Officer. Ground raised is dismissed. Taxing the income of foreign branches - AO held that any income of a resident of India though may be taxed in other country, however, such income shall be included in his total income chargeable to tax in India and relief shall be granted for elimination of double taxation as provided in the relevant DTAA, thus included the income of the foreign branches in the total income of the assessee - HELD THAT:- The issue has to be decided keeping in view the provision of section 90(3) read with Central Govt. notification no S.O. 2123(E) dated 28th August 2008 as well as the decisions cited by learned Departmental Representative. However, it needs to be observed, the submissions made by the assessee before us against the applicability of the decisions of Essar Oil Ltd. [2013 (9) TMI 126 - ITAT MUMBAI] and Bank of Baroda Ltd. [2014 (7) TMI 1185 - ITAT MUMBAI] appears to have not been made before the Departmental Authorities, may be for the reason that the assessee thought the issue to be covered by the decisions of the Higher Appellate Authority in its own case in the preceding assessment years. Therefore, assessee deserves an opportunity to establish its case before the Departmental Authorities that the income of the foreign branches are not includible in the income chargeable to tax in India notwithstanding the Central Government notification no.S.O. 2123(E) dated 28th August 2008 r/w section 90(3) of the Act as well as the decisions cited supra - Accordingly, we restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Disallowance on account broken period interest paid on Government and other approved securities purchased during financial year 2011–12 - HELD THAT:- As could be seen, identical issue came up for consideration before the Tribunal in assessee’s own case for assessment year 2011–12, [2018 (5) TMI 2167 - ITAT MUMBAI] as held reasoning of the Departmental Authorities do not stand to reason. If the assessee is consistently following an accounting method as per which the broken period interest is offered as income when it is received, the broken interest paid while purchasing the securities cannot be disallowed merely on the reasoning that the assessee is not showing the broken period interest income on accrual basis. As could be seen, the Hon'ble Jurisdictional High Court in case of State Bank of India, [2016 (8) TMI 963 - BOMBAY HIGH COURT] after following the decision of the said Court in case of American Express International Corporation [2002 (9) TMI 96 - BOMBAY HIGH COURT] has rejected Revenue’s appeal against allowance of assessee’s claim of deduction in respect of broken period interest paid. While doing so, the Hon'ble High Court has also upheld the decision of the Tribunal in holding that the broken period interest income has to be taxed on due basis instead of accrual basis. It is evident, the aforesaid decision of the Hon'ble Jurisdictional High Court was neither referred to nor examined by the Departmental Authorities while deciding the issue. We restore the issue to the Assessing Officer for deciding afresh. MAT applicability u/s 115JB - As per the provisions of section 115JB of the Act applicable to the relevant assessment year, it cannot be extended to Banking companies.
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