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2012 (12) TMI 405 - AT - Income TaxDTAA – India and Belgium - Whether interest paid by branch of foreign bank as PE to its Head Office in Belgium is allowable as deduction - Disallowing the interest paid to HO on debt & term deposit – Assessee is a branch of foreign bank in India as PE – Assessee has also deducted tax at source – Held that:- Following the decision in case of Sumitomo Mitsui Banking Corporation (2012 (4) TMI 80 - ITAT MUMBAI) that interest paid to the head office of the assessee bank by its Indian branch which constitutes its PE in India is not deductible as expenditure under the domestic law being payment to self, the same is deductible while determining the profit attributable to the PE which is taxable in India. Thus interest paid by the Indian branch of the assessee Bank to its head office and other branches outside India is not chargeable to tax in India, it follows that the provisions of section 195 would not be attracted. In absence of any distinguishing feature brought on record by the Revenue. Appeal decides in favour of assessee. Additional grounds raised for the first time – Held that:- Following the decision in case of Tollaram Hassomal (2006 (3) TMI 136 - MADHYA PRADESH HIGH COURT) that 1additional grounds treating them to be legal grounds in appeal for the first time. Therefore remand the said additional grounds to the ld. CIT(A) to decide the same afresh.
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