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2019 (4) TMI 855 - AT - Income TaxApplicability of of MAT on banking company - assessee being a banking company maintaining its accounts under the Banking Regulations Act, 1949, hence provision contained u/s 115JA will not apply - HELD THAT:- Section 115JA provides for computation of total income chargeable to tax to be an amount equal to 30% of the book profit in case such income is less than 30% of the book profit. However, sub–section (2) of section 115JA of the Act mandates that the company for the purpose of section 115JA of the Act has to prepare its Profit & Loss Account in accordance with the provisions of Part–II & III of Schedule–VI of the Companies Act, 1956. Undisputedly, the assessee being governed under the Banking Regulations Act, 1949, is not required to prepare its Profit & Loss Account under the provisions of Part–II & III of Schedule–VI of the Companies Act, 1956. That being the case, the provisions of section 115JA of the Act are not applicable to the assessee. Deduction u/s 44C - assessee had claimed that amount being expenditure incurred by the head office in the nature of general, administrative expenses - India–U.K. Tax Treaty - HELD THAT:- Since the assessee has not contested the applicability of section 44C of the Act either before the Assessing Officer or before Commissioner (Appeals) and has raised it for the first time before us, in our considered opinion, the Department should be given a fair opportunity to examine assessee’s claim with regard to applicability or otherwise of section 44C qua Article–26 of India–U.K. Tax Treaty. Therefore, we consider it fair and reasonable to restore the issue to the Assessing Officer for examining assessee’s claim with regard to the applicability of section 44C of the Act keeping in view the relevant provisions of India–U.K. Tax Treaty and the judicial precedents dealing with the issue. - Ground is allowed for statistical purpose. Deduction u/s 44C - Revenue appeal - The Assessing Officer after examining the nature of expenses held that the aforesaid expenditure claimed by the assessee being part of Head Office expenses is eligible for deduction under section 44C , hence, cannot be claimed as deduction separately. - HELD THAT:- such expenditures are incurred by the assessee exclusively for the purpose of business of the assessee in India and are not in the nature of Head Office expenses covered u/s 44C. Disallowance on account of Guest House expenses - HELD THAT:- While the Assessing Officer has disallowed the guest house expenses by invoking the provision of section 37(4) of the Act, learned Commissioner (Appeals) has allowed assessee’s claim relying upon his own decision for the assessment year 1996–97. However, as agreed before us by appearing for the rival parties, the issue has now been settled by virtue of the decision of the Hon'ble Supreme Court in case of Britannia Industries Ltd. [2005 (10) TMI 30 - SUPREME COURT], wherein it is held that in view of the provisions of section 37(4) of the Act such expenditure is not allowable. In view of the aforesaid, we reverse the decision of Commissioner (Appeals) on the issue and restore the addition made by the Assessing Officer. Disallowance of interest expenditure attributable to earning of exempt income - assessee has claimed interest income received on tax free bonds as exempt under section 10(15)(iv) - HELD THAT:- As could be seen, learned Commissioner (Appeals) has recorded a categorical factual finding that the interest bearing funds have no nexus with the investment made in tax free bonds. Further, he has also recorded a finding of fact that the assessee had sufficient own fund to make investment in tax free bonds. The aforesaid factual finding of the first appellate authority has not been controverted by the Revenue through any substantive evidence brought on record.
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