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TMI Blog2015 (8) TMI 1584X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses incurred at Head Office on behalf of the Indian Branch of the assessee are deductible u/s. 37(1) of the Act without any restrictions contained in Section 44C? (B) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the disallowance made by AO Rs. 75,03,911/- keeping in view provisions of Section 14A? (C) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the interest income earned on funds by AO, in Indian Branch be termed as interest to self? (D) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the interest on bad and doubtful debts is not chargeable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been placed in the impugned order, specifically records that the issue which has been urged by the revenue did not arise from the order either of Assessing Officer or CIT(A). Therefore the order passed by the Tribunal for the Assessment Year 1997-98 on 17 June, 2005 would not per se apply the subject assessment year. However we find that the order of the Tribunal for the Assessment Year 1997-98 after holding as above, proceeds to consider on merits and holds that the claim of the respondent-assessee is sustainable even on merits. (b) The grievance of the revenue is that the dividend income and interest income are liable for tax under Section 115A(1) of the Act at a special rate which is lower than normal rate of tax. In the above view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower rate. In the present facts it is not disputed that income earned on interest and dividends is chargeable to tax at a special rate under Section 115A of the Act. Consequently, there could be no occasion to invoke Section 14A of the Act to disallow expenditure which has admittedly been incurred in respect of income which is taxable. (d) Accordingly, in view of the clear position of law, question of law as raised does not give rise to any substantial question of law. Thus not entertained. Regarding Question C: 4. (a) The learned Counsel for the revenue fairly states that the same is concluded against the revenue by virtue of decision of this Court in Income Tax Appeal No. 1430/2013 DIT v. Credit Agricole lndosuez dated 17 June, 2015. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-assessee had claimed the benefit of DTAA. However on 29 March, 2000, the respondent-assessee had filed revised return of income wherein it has specifically pleaded that the interest received from branches outside India cannot be considered as taxable income as one cannot earn income out of itself. The Assessing Officer by the impugned order held that the respondent-assessee's interest income is taxable under the normal provisions of the Act as well as DTAA. On further appeal, the Commissioner of Income-tax (Appeals) (the 'CIT(A)') by the order in appeal holds that the interest income is chargeable to tax under normal provision of the Act i.e. Section 9(1)(v)(c) of the Act. On further appeal, the Tribunal held that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506. In any view of the matter, Section 90(2) of the Act itself provides that the assessee has an option to either invoke DTAA or normal provisions of tax to the extent which of the two is more beneficial to it. In this case, by filing the revised return of income the claim to be subjected to tax under the DTAA stood withdrawn. In the above view, we see no substantial question of law arising for our consideration. Accordingly, Question (C) as formulated by the revenue, does not give rise to any substantial question of law. Regarding Question D: 5. (a) The respondent-assessee had in the subject assessment year, in terms of Reserve Bank of India guidelines, had declared interest on loans rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest has not been credited to Profit and Loss Account but to a reserve amount called RDFI account maintained in terms of Reserve Bank of India's guidelines. Besides, this Court in CIT v. Citi Bank N.A. [1994] 208 ITR 930/75 Taxman 433 had recorded the practice of banks to effectively control it's problem loans and it's recoveries by keeping/maintaining a memorandum record of interest due on such accounts. This is an usual banking practice to keep a tab/check on the problem loans and interest thereon. The provision under Section 43D of the Act are very clear and unequivocal that the interest receivable on bad and doubtful debts are chargeable to tax only when it is credited to the Profit and Loss Account and/or when they are actu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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