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Claim of relief under section 80L for interest from deposits in a foreign branch of a bank. Analysis: The case involves the assessment of a minor through his guardian claiming relief under section 80L for interest earned from deposits in the Singapore branch of a bank. Initially, the Income Tax Officer (ITO) rejected the claim, stating that the Banking Companies Regulation Act did not apply to these deposits. Upon appeal, the Appellate Assistant Commissioner (AAC) upheld the ITO's decision, leading to the matter being brought before the Appellate Tribunal ITAT MADRAS-B for review. The crux of the issue lies in determining whether the Banking Regulation Act, 1949 applies to a foreign branch of an Indian bank for the purposes of section 80L. The appellant argued that the branch in question was not a separate entity and should be considered part of the Indian banking institution as a whole. The Tribunal noted that the Banking Regulation Act applies to banking companies to which it is relevant, regardless of the location of their branches. It emphasized that a branch, whether domestic or foreign, is not a distinct entity but an extension of the parent banking company. Therefore, deposits made in a foreign branch of an Indian bank are considered deposits with the banking company as a whole, making the appellant eligible for relief under section 80L. The Tribunal highlighted that the debtor in such cases is the bank itself, not the specific branch where the transaction occurred. It clarified that the legal framework, including the Banking Regulation Act, applies uniformly to the entire banking company, irrespective of the branch's location. The Tribunal rejected the argument that a foreign branch operates independently due to local laws, emphasizing that the branch is an agent of the parent company and subject to the parent company's regulations. Consequently, the Tribunal accepted the appellant's claim for relief under section 80L, as the deposits in the foreign branch of the bank were deemed deposits with the banking company covered by the Banking Regulation Act. In conclusion, the Tribunal ruled in favor of the appellant, allowing the claim for relief under section 80L for interest earned from deposits in the foreign branch of the bank. The decision underscored the unity of the banking company under the Banking Regulation Act, dismissing the notion of foreign branches as separate entities and affirming the applicability of the Act to deposits made in such branches.
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