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2019 (2) TMI 2043 - AT - Income TaxIncome accrued in India - PE in India - As per CIT-A addition has been wrongly made - grievance of the Revenue is that the CIT(A) ought to have appreciated that the PE of the assessee in India is a separate entity and interest paid by the Branch to its Head Office is liable to be taxed in the hands of the assessee in India as income - HELD THAT:- This aspect of the matter has indeed been dealt with by the Tribunal vide its order [2014 (4) TMI 733 - ITAT MUMBAI] in favour of the assessee and since the order of the Tribunal continues to hold the field, as it has not been altered by any higher authority, the Ground raised by the Revenue is liable to be dismissed. We hold so. Addition u/s 40(a)(i) - whether CIT(A) is correct in holding that the provisions of section 40(a)(i) do not apply without appreciating that the interest was chargeable to income? - HELD THAT:- It is not Sec. 40(a)(i) of the Act which has been invoked by the Assessing Officer in order to bring to tax the impugned interest income. Pertinently, in this year, the impugned interest income has been brought to tax on the ground that it accrues or arises in India on account of assessee’s PE in India. In contrast, in the earlier year, Sec. 40(a)(i) of the Act was invoked to disallow the expenditure represented by the interest paid by the Indian branch to the Head Office on the ground of non-deduction of tax at source, whereas in the instant year the said expenditure has been explicitly allowed by the AO after noticing that the requisite tax has been deducted at source. We are only trying to bring out the aforesaid to point out that the Ground of appeal has been raised by the Revenue without considering the relevant facts of the instant year. Be that as it may, the aforesaid Ground is liable to be dismissed.
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