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2013 (6) TMI 188 - HC - Income TaxHead office expenditure - deduction u/s 44A - effect of amendment - review petition - held that - during Assessment Year 1994-95, Section 44C of the said Act as applicable would be one existing as on 28th June, 1984 and not as existing during the subject assessment year. This is because the preamended Section 44C of the said Act allowed more deduction to head office expenses then the amended Section 44C of the said Act. Consequently, the issue as raised before the Tribunal and this Court would continue to be governed for the subject assessment year by the order of this Court in the matter of Deutsche Bank AG (2003 (7) TMI 6 - BOMBAY High Court). It is clear that the order dated 20th November, 2012 2013 (6) TMI 200 - BOMBAY HIGH COURT was passed being conscious of the amendment to Section 44C of the Act. In these circumstances, Review Petition is dismissed with no order as to costs.
Issues:
1. Review of an order passed by the High Court regarding the Revenue's Appeal for Assessment Year 1994-95. 2. Interpretation of Section 44C of the Income Tax Act, 1961, and its application to the case. 3. Consideration of the Double Taxation Avoidance Agreement (DTAA) between Federal Republic of Germany and India. 4. Determination of the applicable deduction for head office expenses under the Indian Income Tax Act. Analysis: 1. The Petitioner sought a review of the High Court's order dated 20th November, 2012, which declined to entertain the Revenue's Appeal for Assessment Year 1994-95. The Court's decision was influenced by the Tribunal's ruling in favor of the Respondent-Assessee, following a precedent set by the Court in a previous case involving Deutsche Bank AG. The Petitioner argued that the previous decision was based on Section 44C of the Income Tax Act as it stood during Assessment Year 1984-85, which was different from the version applicable in 1994-95, warranting a review of the order. 2. The crux of the matter revolved around the interpretation of Section 44C of the Income Tax Act, 1961. The Petitioner contended that the amendment to Section 44C, effective from 1st April, 1993, altered the deduction allowed for head office expenses. It was emphasized that the pre-amended Section 44C provided for a more favorable deduction compared to the amended version. Consequently, the Court had to determine whether the decision in the Deutsche Bank AG case, based on the pre-amended Section 44C, was still applicable to the Assessment Year 1994-95. 3. The Tribunal's order referenced the Double Taxation Avoidance Agreement (DTAA) between Germany and India, signed on 28th June, 1984. The DTAA stipulated that the deduction for head office expenses should not be lower than what was permissible under the Indian Income Tax Act as of the agreement date. This provision remained in force until an amendment in the DTAA for the Assessment Year 1998-99, indicating the relevance of international agreements in determining tax liabilities. 4. Considering the above factors, it was concluded that for Assessment Year 1994-95, the applicable Section 44C of the Income Tax Act was the one in force as of 28th June, 1984. This meant that the deduction for head office expenses should align with the pre-amended provisions, as they were more advantageous compared to the amended Section 44C. Therefore, the Court upheld the decision based on the Deutsche Bank AG case, as it was in line with the relevant statutory framework for the assessment year in question. In light of the foregoing analysis, the Review Petition was dismissed by the High Court, with no order as to costs, reaffirming the application of the precedent set in the Deutsche Bank AG case to the specific circumstances of the case at hand.
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