2015 (7) TMI 1127 - HC - Income Tax

Addition on account of interest received from head office - Held that - Tribunal was correct in holding that addition on account of interest received from head office has been wrongly made by the Assessing Officer. The respondent-assessee has not claimed benefit of the double taxation avoidance agreement. See DIT (Intnl. Txn.) v. Credit Agricole Indosuez 2015 (6) TMI 974 - BOMBAY HIGH COURT Tribunal is correct in holding that section 44C is not applicable and these expenses are allowable and under section 37(1) of the Income-tax Act. See Commissioner of Income-Tax Versus Emirates Commercial Bank Ltd. 2003 (4) TMI 2 - BOMBAY HIGH COURT

Summary

Issues:
1. Appeal challenging the order of the Income-tax Appellate Tribunal for assessment years 1998-99 and 1999-2000.
2. Interpretation of the addition on account of interest received from the head office.
3. Applicability of section 44C and allowance of expenses under section 37(1) of the Income-tax Act for travelling expenses incurred by head office personnel.

Analysis:
1. The Revenue's appeal contested the Tribunal's order for the assessment years 1998-99 and 1999-2000. The Tribunal disposed of cross appeals by the assessee and the Revenue. The Revenue's counsel reformulated question No. 1 regarding the addition of interest received from the head office by the Assessing Officer. However, it was acknowledged that this issue was already decided against the Revenue in a previous case, and thus, the question did not raise any legal concern and was not entertained.

2. The second question raised was about the applicability of section 44C and the allowance of expenses under section 37(1) of the Income-tax Act for travelling expenses incurred by head office personnel. The Tribunal's decision aligned with a previous ruling in CIT v. Emirates Commercial Bank Ltd. The Tribunal's order was consistent with the decision in a prior case involving the same respondent-assessee. The Revenue's appeal against the earlier decision was dismissed by the High Court and subsequently by the Supreme Court. Therefore, the second question also did not present any substantial legal issue and was not entertained.

3. Consequently, the High Court dismissed the appeal, stating that neither of the raised questions posed any significant legal challenges warranting consideration. No costs were awarded in the case.