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TMI Blog2014 (1) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income, assessee reduced this amount from taxable income stating that the same is not taxable since interest received from self. Similarly, the assessee debited an amount of Rs.1,37,58,736/- of interest paid to its Head Office, however in the computation of income, the same has been added back to the total income stating that the same is not claimed as deduction in view of the fact that it is a payment to self. AO did not agree with the contention of the assessee in respect of reducing the amount of interest of Rs.24,14,208/- from taxable income. However, the AO accepted the contention of the assessee for adding back the amount of Rs.1,37,58,736/- on account of interest paid by the assessee branch to Head Office on the ground that no TDS was deducted and accordingly as per the provisions of section 40(a)(i), the same is not allowable. The Dispute Resolution Panel-II (DRP) in its order dated 25.6.2010 confirmed the view of AO. Hence this appeal before us. 5. At the time of hearing, it was brought to our notice by the ld.AR that similar issue has been considered in the assessee's own case by Mumbai Bench of the Tribunal in assessee's own case in Oman International Bank SAOG V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to state that assessee in Ground No.1(c ) has stated that AO has made the additions of Rs.1,37,58,736/- being interest paid by the assessee Branch to Head Office which amount to double disallowance as the assessee itself has not claimed deduction. It was also pointed out that the DRT in its direction has also directed AO to verify that the assessee itself made disallowance in the return of income filed . The ld. AR referred the assessment order and submitted that the AO while computing the income has made addition/disallowance of the said amount. 9. In this regard, we direct the AO that while giving effect to this order he will comply with the directions of DRP and not make further disallowance if the assessee itself had made the said disallowance while computing its income under the Act. Subject to above observations Ground No.1 and 2 of the appeal are allowed. 10. In Ground No.3 of the appeal, the assessee has disputed the order of AO in disallowing transactions charges of Rs.4,20,438/- on Nostro Account u/s 40(a)(i) of the Act. 11. At the time of hearing, ld. Representatives of both the parties agreed that the above issue is covered in favour of the assessee in the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has become ir-relevant" 13. The AO has stated that in the return of income vide note to the computation the assessee had claimed deduction of Rs.7,32,941/- on account of expenses incurred by Head office on behalf of Indian Branch. The AO stated that the said expenses are within the purview of section 44C and therefore no additional deduction or allowance is permitted under the provisions of Income Tax Act. Hence, he added the same. 14. At the time of hearing, ld. AR submitted that the above issue is covered in favour of the assessee by the decision of Tribunal in assessee's own case for the assessment year 2005-06 vide order dated 13.11.2013 (supra) and referred paras 17 and 18 of the said order. He submitted that similar issue has also been considered by the Hon'ble Jurisdictional High Court in the appeal filed by department in Director of Income Tax (IT)-II, V/s Oman International Bank in Income Tax Appeal (LOD) No.1889 of 2012 (AY- 1996-97) vide order dated 26.2.2013, wherein the Hon'ble High Court confirmed the order of Tribunal by relying on its own decision in the case of CIT V/s Emirates Commercial Bank ltd (262 ITR 55 (Bom)). He placed on record a copy of the said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 44C of the Act to bring it in to the ambit the expenditure incurred on Shri Zakariya. Hence this appeal by the assessee. 19. Ld. AR submitted that salary paid to Shri Zakariya while working in Indian Branch had been taxed in India and filed a copy of the return to substantiate his submissions. He further submitted that there is an agreement entered into pursuant to which Shri Zakariya had been deputed at Mumbai Branch office of the assessee for a period of 2 years. He submitted that the expenditure have been incurred on Shri Zakariya for his working in assessee's branch office in India and therefore provisions of section 44C of the Act will not apply. 20. On the other hand, ld. DR supported the disallowance made by AO and submitted that basically he is an employee of Oman. 21. We have carefully considered the order of AO and the direction of DRP and the submission of ld. Representatives of the parties. We have also gone through the letter dated 3.5.2005, copy is placed on record, by which Shri Zakariya has been appointed as officer in Mumbai branch for a period of two years commencing from 1st day of his reporting at Mumbai Branch. In the said letter allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the direction of the DRP (per para 8 page 7 of the directions ) by not reducing the sum of Rs.58,948/- on account of reversal of excess provision which was brought to tax in the AY 2005-06" 27. We have heard ld. Representatives of the parties and perused the order of AO and the direction of DRP. We observe that the AO while discussing the said amount in para 8.3 of the Draft Assessment Order stated that the sum of Rs.58,948/- on account of reversal of excess provision expenses taxed in assessment year 2005-06 is reduced from total income for assessment year 2006-07. The DRP also directed the AO to verify the above claim if found credited and make necessary adjustment to the credit to the total income. The Ld. AR submitted that the AO has not deducted the said amount and therefore, the direction be given to AO to reduce the said amount subject to verification in the assessment year under consideration. 28. Since DR has not objected to above submission of the ld. AR, we restore this issue to AO with a direction to verify the claim and if the said amount has already been taxed in the preceding assessment year, the necessary deduction be allowed in the assessment year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11 above, the AO be directed to grant refund along with interest under section 244A till the date of receipt of the refund order. The assessee has not received an intimation under section 143(1) for the AY-2006-07. The assessee is entitled to a refund arising out of tax deducted at source along with interest u/s 244A thereon" However, AO has not considered the said direction of the DRP nor any discussion is made in the assessment order as the order of the AO is a non-speaking order. In view of above, we direct the AO to allow interest to the assessee as per provisions of Act after considering the direction as given by DRP in para 12 of its order. Hence, Ground No.9 of the appeal taken by assessee is allowed for statistical purposes. 33. Ground No.10 of the appeal taken by assessee reads as under: "10. The AO erred in not following the directions of the DRP (per para 13 of 9 of the directions ) by not recording carry forward of business loss and unabsorbed depreciations" 34. We observe that the DRP has directed the AO that the claim of the assessee be examined and subject to verification to allow carry forward of business loss and unabsorbed depreciations if permissible /allowa ..... 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