Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (4) TMI 1343 - AT - Income TaxAddition made on account of data processing cost - addition u/s 40(a)(ia) on interest to head office - HELD THAT:- Issue decided in favour of assessee as relying on own case [2014 (3) TMI 726 - ITAT MUMBAI] payment made by the Branch to the H.O. towards reimbursement of cost of data processing cannot be held to be covered within the scope of expression “royalty” under Article 12(3)(a) of the India Belgium DTAA. Accordingly, the conclusion drawn by the learned Commissioner (Appeals) is affirmed. Since we have already held that the data processing cost paid by the assessee does not amount to royalty, consequently, there is no requirement for deducting tax at source on such payment. Therefore, the provisions of section 40(a)(i) will not apply. Deduction u/s 44C - The data processing cost, pertains to allocation of expenses incurred by the Head Office on prorata basis for the banking application software acquired by the Head Office. Such expenditure does not fall within the meaning of “Head Office Expenses” as provided in section 44C. The nature of expenses as given in section 44C, has to be necessarily in the nature of executive and general administrative expenses only. The conclusion drawn by the learned Commissioner (Appeals) that such expenditure does not fall within the purview of section 44C. Thus as the assessee had itself disallowed the said amount on account of failure to deduct the tax at source and further disallowance will lead to double disallowance. Thus, the ground no.4 is also dismissed
|