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TMI Blog2012 (8) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the A.Y. 2002-03 being ITA 2022/M/2008 and ITA 2048/M/2008 which are directed against the order of the Ld. CIT (A)-33, Mumbai dated 31.12.2007. 3. The solitary issue involved in the appeal of the assessee for the A.Y. 2002-03 relates to the addition of Rs.1,48,30,613/- made by the A.O. and confirmed by the Ld. CIT (A) on account of "interest" paid by the 'Indian Branches of the assessee bank to its head office and other overseas branches'. 4. The assessee, in the present case is a commercial bank having its Head Office in France. It carries on the normal banking activities including financing of foreign trade and foreign exchange transactions in India through its eight branches situated at Mumbai, New Delhi, Kolkata, Bangalore, Pune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est paid by the Indian branches of the assessee bank to its head office and overseas branches was chargeable to tax in India. Accordingly, the addition made by the A.O. on this issue was confirmed by the Ld. CIT (A). 5. We have heard the arguments of both the sides and perused the relevant material on record. As agreed by the Ld. Representatives of both the sides, the issue involved in this appeal of the assessee now stands squarely covered by the decision of Special Bench of the ITAT in the case of Sumitomo Banking Corp. Mumbai wherein it was held, after elaborately discussing the legal position emanating from the interpretation of relevant provisions of Indian Income-tax Act as well as treaty, that interest paid to the head office of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the appellate order passed for A.Y. 1999-2000, a finding was given by his predecessor that the 'said investment was made by the assessee out of its own funds'. 8. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. It is observed that the investment in shares of Leela Venture Ltd. which fetched the exempt dividend income to the assessee, was made in the previous year relevant to A.Y. 1999-2000 and as found by the Ld. CIT (A), the said investment was made by the assessee out of its own funds. This finding of fact recorded by the Ld. CIT (A) while deleting the disallowance made by the A.O. u/s.14A has not been disputed or controverted by Ld. D.R. at the time of hearing before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the his predecessor. He, therefore, directed the A.O. not to disturb the system of accounting regularly followed by the assessee and accept the income as declared by the assessee following the same method. 11. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that this issue is squarely covered in favour of the assessee by the decision of Hon'ble Madras High Court in the case of CIT vs. Bank of Tokyo 71 Taxman 85 wherein it was held that 'income from deferred guarantee commission did not accrue or arise in the year in which guarantee agreements were entered'. It was held that such income should be spread over the period to which the guarantee commission related and should be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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