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2015 (1) TMI 1255 - AT - Income TaxDisallowance of deduction of head office expenses allocated to Indian branches - whether entire amount should be allowed as per the provisions of Article 7(3) of the convention between the Government of India and the Government of UAE? - whether or not the disallowances set out under section 44C, or for that purpose- any artificial disallowances under the provisions of the Income Tax Act as applicable to a resident assessee, will come into play in computation of taxable income of the assessee under Article 7 also? - Held that:- Reverse discrimination, which would have resulted by not restricting the deductions in the light of the provisions of the Act for nonresidents assessees, was not permissible under the Indo UAE treaty prior to the protocol amendment in question, and such a reverse discrimination is permissible even now as specifically provided for in the said protocol amendment in the Indo UAE tax treaty itself. That is what is clearly discernable from the Indian tax treaty approach and is completely in harmony with the judicial precedents and the best practices in well developed international tax jurisdictions. The issue is squarely covered by the decision of this Tribunal, in assessee’s own case for the assessment year 1996-97. This stand has now been specifically accepted in the protocol to the India UAE tax treaty. Just because there is a more specific and more unambiguous provisions post the protocol amendment, one cannot come to the conclusion that the judicial precedent, rendered by a coordinate bench, even without these specific and unambiguous expressions, cases to hold good. That will be stretching the things too far and will also be contrary to approach adopted by a very large number of judicial precedents set out earlier in this order. Thus we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. The claim made by the assessee, by way of note to the income tax return, is rejected. As the assessee has incurred loss in this year, no part of head office expenses is allowable under section 44C. As the assessee has not anyway claimed any deduction in the income tax return in this respect, no disallowance is warranted. - Decided in favour of assessee MAT applicability - whether the provisions of Section 115 JB will apply to the assessee? - Held that:- In the case of Krung Thai Bank (2010 (9) TMI 18 - ITAT, MUMBAI ), a coordinate bench of this Tribunal has, inter alia, held that the provisions of Section 115JB come into play only when the assessee is required to prepare its profit and loss account in accordance with the provisions of Part II and III of Schedule VI to the Act, but then since banking companies, under Section 211(2) of the Act, are not covered by this requirement, the provisions of Section115JB cannot be applied in the case of the banking companies. Of course, there is an amendment in Section 115JB which extends applicability of this section to the cases in which the accounts are not prepared in accordance with the Schedule VI requirements as well, but then this amendment is effective from 1st April 2013. The assessment year before us is 2002-03 and it remains unaffected by this legislative amendment. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee. We, accordingly, direct the Assessing Officer to delete the impugned levy of MAT under section 115 JB. - Decided in favour of assessee
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