9911796707
Advanced Search 
TMI Blog2005 (6) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... only one ground is pressed before us and this ground consist of assessee's grievance against CIT(A)'s sustaining the disallowance of Rs. 86,75,496 being expenditure incurred on mobilization of deposits abroad. This is ground No. 3; ground numbers 1 and 2 were not pressed before us. Ground Nos. 1 and 2 are therefore dismissed as withdrawn. 4. The reason of disallowance being sustained is that the expenses incurred abroad on mobilization of NRI deposits have been treated as head office expenditure within meanings of section 44C, which can only be allowed subject to the limitations placed in that section, and that the same have not been accounted for in the books of account of the Indian branches. A plain reading of the orders of the authorities below shows that the details of expenditure, along with certification by the auditors, were duly furnished at the assessment stage. 5. Having heard the rival contentions and having perused the material on record, we find that the objections taken to the deduction of the said expenditure are devoid of legally sustainable reasons. As far as the question of the expenses incurred abroad being hit by the provisions of section 44C is concerned, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g all these factors in mind, as also entirety of the case, we deem it fit and proper to delete the impugned disallowance of Rs. 86,75,496. The assessee gets relief accordingly. 6. Ground No. 3 is thus allowed. 7. In the result, assessee's appeal for the assessment year 1992-93 is partly allowed in the terms indicated above. 8. We now take up revenue's appeal for the assessment year 1992-93 i.e., ITA No. 2501/Mum./99. 9. In the first ground of appeal, revenue is aggrieved of CIT(A)'s deleting the disallowance in respect of club subscriptions. 10. Learned representatives fairly agreed that the issue is covered by the judgment of Hon'ble Bombay High Court in the case of Otis Elevator Co. India Ltd. v. CIT [1992] 195 ITR 682 and in assessee's own case for the assessment year 1989-90. Learned Departmental Representative, however, dutifully relied upon the order of the Assessing Officer. Respectfully following Hon'ble Bombay High Court and respectfully following co- ordinate bench in assessee's own case, we confirm the order of the CIT(A) and decline to interfere in the matter. 11. Ground No. 1 thus fails. 12. In the second ground of appeal, revenue is aggrieved of CIT(A)'s deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und No. 1 is not pressed. It is therefore dismissed for want of prosecution. 25. In ground No. 2, the assessee has challenged CIT(A)'s confirming the disallowance of Rs. 1,48,45,709 on account of NRI finds mobilization as head office expenses. 26. Following the view taken by us for the assessment year 1992-93, as elaborated in paragraph 5 above, we deem it fit and proper to delete the disallowance. The assessee gets relief accordingly. 27. Ground No. 2 is thus allowed. 28. In ground No. 3, assessee is aggrieved of CIT(A) confirming the disallowance under section 37(2A) on account of holiday home expenses. 29. Following the view taken by us for the assessment year 1992-93 earlier in this order, we direct the Assessing Officer to delete the disallowance. The assessee gets the relief accordingly. 30. In ground No. 4, the assessee is aggrieved that the CIT(A) erred in upholding the Assessing Officer's action in adjusting the closing provision under section 36(1)(viia) against the bad debts written off during the year. 31. Learned representatives agree that this issue is also a covered issue by the order dated 27th November, 2003 in the case of Oman International Bank, Saog v. Dy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Representative, however, dutifully relied upon the order of the Assessing Officer. Respectfully following Hon'ble Bombay High Court and respectfully following co-ordinate bench in assessee's own case, we confirm the order of the CIT(A) and decline to interfere in the matter. 41. Ground No. 1 thus fails. 42. In the second ground of appeal, revenue is aggrieved of CIT(A)'s deleting the addition on account of interest receipt from its overseas branches. 43. This issue is also covered, in favour of the assessee, by Tribunal's decisions for the assessment years 1982-83 and 1989-90. We see no reasons to take any other view of the matter than the view so taken by the co-ordinate benches. We, therefore, confirm the order of the CIT(A) on this issue as well and decline to interfere in the matter. 44. Ground No. 2 is also therefore dismissed. 45. In third ground of appeal, revenue is aggrieved that the CIT(A) erred in deleting the disallowance of salaries in respect of expatriate staff posted in India. 46. There is no dispute that the expatriate employees in question were working exclusively for the India operations. Following the discussions in paragraph 5 above, these e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions and having perused the material on record, we are of the considered view that the appellant deserves to succeed on this issue as well. It is no longer res integra that an issue can be raised for the first time in the appellate proceedings. The authority, if needed, is contained in Hon'ble Supreme Court's judgment in the case of Jute Corpn. of India Ltd. Once the debts have been considered to be bad and written off, it is only a natural corollary to such a write off that the interest debited in the suspense account in respect of such a write off is also be allowed as an admissible deduction. We, therefore, deem it fit and proper to remit this issue to the file of the Assessing Officer for adjudication de novo, in the light of the above observations and on merits. The ground is to be treated as allowed for statistical purposes. 59. Ground No. 3 is allowed for statistical purposes. 60. In the result, assessee's appeal for the assessment year 1994-95 is partly allowed. 61. ITA No. 751/Mum./98 is revenue's appeal for the assessment year 1994-95. 62. In the first ground of appeal, revenue is aggrieved of CIT(A)'s deleting the disallowance in respect of club subscriptions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the compilation. In this view of the matter, and having heard rival contentions on the issue, we see no reasons to disturb the findings on the CIT(A). We confirm the same and decline to interfere in the matter. 73. Ground No. 4 is also thus dismissed. 74. In the result, revenue's appeal is dismissed. 75. We now take up cross appeals for the assessment year 1995-96. 76. First, assessee's appeal i.e. ITA No. 5895/Mum./98. 77. In assessee's appeal only one ground is pressed before us and this ground consist of assessee's grievance against CIT(A)'s sustaining the disallowance of Rs. 1,33,05,615 being expenditure incurred on mobilization of deposits abroad. This is ground No. 1; ground number 2 was not pressed before us. Ground No. 2 is therefore dismissed as withdrawn. 78. The reason of disallowance being sustained is that the expenses incurred abroad on mobilizaton of NRI deposits have been treated as head office expenditure within meanings of section 44C, which can only be allowed subject to the limitations placed in that section, and that the same have not been accounted for in the books of account of the Indian branches. A plain reading of the orders of the authorities bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law laid down by the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. (supra). As long as the expenditure is really incurred and is otherwise deductible, the deduction cannot be declined on the ground that it has not been debited in the books of account. We have also noted that as noted in the Assessing Officer's order itself, the requisite details were duly furnished by the assessee. Keeping all these factors in mind, as also entirety of the case, we deem it fit and proper to delete the impugned disallowance of Rs. 86,75,496. The assessee gets relief accordingly. 80. Ground No. 1 is thus allowed. 81. The assessee's appeal for the assessment year 1995-96 is thus partly allowed in the terms indicated above. 82. ITA No. 5514/Mum./98 is revenue's appeal for the assessment year 1995-96. 83. In the first ground of appeal, revenue is aggrieved of CIT(A)'s deleting the disallowance in respect of club subscriptions. 84. Learned representatives fairly agreed that the issue is covered by the judgment of Hon'ble Bombay High Court in the case of Otis Elevator Co. India Ltd. (supra) and in assessee's own case for the assessment year 1989-90. Learned Departmental Repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure within meanings of section 44C, which can only be allowed subject to the limitations placed in that section, and that the same have not been accounted for in the books of account of the Indian branches. A plain reading of the orders of the authorities below shows that the details of expenditure, along with certification by the auditors, were duly furnished at the assessment stage. 97. Having heard the rival contentions and having perused the material on record, we find that the objections taken to the deduction of the said expenditure are devoid of legally sustainable reasons. As far as the question of the expenses incurred abroad being hit by the provisions of section 44C is concerned, the law is now settled by the Hon'ble Bombay High Court in the case of Emirates Commercial Bank Ltd. (supra) wherein Their Lordships have held that "the expenditure which is covered by section 44C is of a common nature, which is incurred for various branches or which is incurred for the purpose of head office and the branch". Their Lordships held that the expenditure incurred exclusively for the purposes of a branch cannot be covered by section 44C. It would thus follow that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in appeal is covered in favour of the assessee by Tribunal's decision in the case of Deutsche Bank v. DCIT [2003] 86 ITD 431 . Learned Departmental Representative, however, dutifully relied upon the orders of the authorities below. We see no reasons to take any other view of the matter than the view so taken by the co-ordinate bench. We have also noted that in the other years in assessee's own case, the relief given on this issue by the CIT(A) has been accepted by the revenue and is not challenged in further appeal. There cannot be any good reasons for the revenue to take a different stand for this year. In view of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to delete the impugned disallowance. The assessee gets relief on this issue as well. 102. Ground No. 3 is thus allowed. 103. In the result, assessee's appeal is partly allowed for the assessment year 1996-97 as well. 104. The assessee's appeal for the assessment year 1995-96 is thus partly allowed in the terms indicated above. 105. ITA No. 3899/Mum./2000 is revenue's appeal for the assessment year 1996-97. 106. In the only ground of appeal, revenue is aggrieved that the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Emirates Commercial Bank Ltd. (supra) wherein Their Lordships have held that "the expenditure which is covered by section 44C is of a common nature, which is incurred for various branches or which is incurred for the purpose of head office and the branch". Their Lordships held that the expenditure incurred exclusively for the purposes of a branch cannot be covered by section 44C. It would thus follow that the provisions of section 44C will hit only such expenditure which are not being capable of being allocable to any particular profit centre and which are required to be allocated on some general basis. The expenses on mobilization of NRI deposits cannot be said to fall in this category because these expenses are for the purpose of India specific operations where non-resident Indian deposits are of relevance. These expenses, therefore, cannot be allocated to operations in other countries or to the head office. This kind of an expenditure, in our considered view, does not fall under the scope of head office expenditure under section 44C of the Act. In the case of American Express Bank Ltd. in which a different view was taken by the Tribunal has since been reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter. 119. Ground No. 1 is thus dismissed. 120. In the second ground of appeal, revenue is aggrieved of CIT(A)'s deleting the disallowance in respect of club subscriptions. 121. Learned representatives fairly agreed that the issue is covered by the judgment of Hon'ble Bombay High Court in the case of Otis Elevator Co. India Ltd. (supra) and in assessee's own case for the assessment year 1989-90. Learned Departmental Representative, however, dutifully relied upon the order of the Assessing Officer. Respectfully following Hon'ble Bombay High Court and respectfully following co-ordinate bench in assessee's own case, we confirm the order of the CIT(A) and decline to interfere in the matter. 122. Ground No. 2 also thus fails. 123. In ground No. 3, revenue is aggrieved that the CIT(A) ought to have held that the exemption under section 10(15) is on net income and not the gross receipts. 124. Having heard the rival contentions and having perused the material on records, we find that this issue is also covered, in favour of the assessee, by Tribunal's order dated 6th June, 2002 in the case of State Bank of India v. Jt. CIT, a copy of which was placed before us at page 29 of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
