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TMI Blog2013 (11) TMI 1640X X X X Extracts X X X X X X X X Extracts X X X X ..... e of transaction charges on Nostro account u/s 40(a)(i) - Held that:- Transaction charges paid on Nostro Account were in the nature of bank charges for maintaining the accounts with banks outside India. These charges were recovered directly by way of debits to the concerned accounts of the assessee with these banks and the same represented business income of those banks which accrued/arisen outside India. As held by the Tribunal, no tax therefore was required to be deducted at source from the transaction charges paid on Nostro account and the disallowance made by the A.O. u/s 40(a)(i) of the Act was not sustainable. Respectfully following the orders of the Tribunal on the similar issue involved in earlier years, we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. on account of transaction charges u/s 40(a)(i) of the Act Traveling expenses incurred by the Head Office on traveling of its own staff and directly in connection with India branch are allowable u/s 37(1) of the Act and section 44-C has no application to such expenses - I.T.A. No.3362/Mum/2009, I.T.A. No.3146/Mum/2009 & C.O. No. 213/Mum/2009 Arising out of ITA No. 3146/Mum/2009 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self. Respectfully following the said decision of the ITAT in the case of Sumitomo Mitsui Banking Corpn., we delete the addition made by the A.O. and confirmed by the ld. CIT(A) on account of interest received by the Indian branch of the assessee bank from its Head Office and allow ground No. 1 of the assessee s appeal. 5. In ground No. 2, the assessee has challenged the action of the ld. CIT(A) in directing the A.O. to tax the interest of ₹ 86,23,836/- paid by the Indian branch of a foreign bank to its Head Office as per the relevant provisions of DTAA. 6. At the time of hearing before us, the ld. Representatives of both the sides have agreed that this issue is also squarely covered in favour of the assessee by the decision of the Special Bench of ITAT in the case of Sumitomo Mitsui Banking Corpn. (supra) wherein it was held that interest paid to the Head Office of the assessee bank by its Indian branch cannot be taxed in the hands of assessee bank, a foreign enterprise being payment to self which cannot give rise to any income that is taxable in India as per the domestic law. Respectfully following the said decision of the Special Bench of ITAT in the case of Sumitomo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank NA, (2003) 264 ITR 18. The ld. counsel for the assessee has also placed on record before us the un-reported judgment of Hon ble Supreme Court in the case of CIT vs. Citi Bank NA (Civil Appeal No. 1524 of 2006 dated 12th August, 2008) wherein the view taken by the Hon ble High Court has been upheld by the Hon ble Apex Court. Keeping in view these decisions of Hon ble jurisdictional High Court and Hon ble Apex Court, we uphold the impugned order of the ld. CIT(A) giving appropriate direction to the A.O. to decide the issue relating to the treatment to be given to the broken period interest and dismiss ground No. 1 of Revenue s appeal. 11. In ground No. 2, the Revenue has challenged the action of the ld. CIT(A) in deleting the amount of ₹ 16,35,60,206/- made by the A.O. by way of disallowance on account of bad debts written off. 12. The deduction claimed by the assessee on account of bad debts written off was disallowed by the A.O. to the extent of ₹ 16,35,60,206/- on the ground that there was a possibility of recovery the relevant debts claimed as bad in future and it was immature to write of the same in the year under consideration. On appeal, the ld. CIT(A) d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid on Nostro account and the disallowance made by the A.O. u/s 40(a)(i) of the Act was not sustainable. Respectfully following the orders of the Tribunal on the similar issue involved in earlier years, we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. on account of transaction charges u/s 40(a)(i) of the Act and dismiss ground No. 3 of Revenue s appeal. 16. In ground No. 4, the Revenue has challenged the action of the ld. CIT(A) in deleting the disallowance made by the A.O. on account of traveling expenses of ₹ 9,09,333/- incurred on Head Office personnel to India and certified fees paid to the auditors. 17. The expenses claimed by the assessee on traveling of employees of its Head Office to monitor the operations of India branch and service fees paid to the auditors for issuance of certificate were disallowed by the A.O. on the ground that the same were covered within the purview of section 44-C of the Act and no extra/additional deduction was allowable for the said expenses under any other provisions of the Act. On appeal, the ld. CIT(A) deleted the said disallowance made by the A.O. following his appellate orders in assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06 in case any authority reverses the decision of the Tribunal for A.Y. 1995-96. 21. After considering the rival submissions and perusing the relevant material available on record, we find that the direction given by the ld. CIT(A) on this issue is not proper. When the assessee admittedly had written off the relevant debts as bad in its books of account in A.Y. 1995-96 and not in A.Y. 2005-06, it is not entitled to deduction on account of the said bad debts in A.Y. 2005-06 as held by the Hon ble Supreme Court in the case of TRF Limited vs. CIT 323 ITR 397 (SC). We, therefore, set aside the deduction given by the ld. CIT(A) on this issue and allow ground No. 5 of Revenue s appeal. 22. During appellate proceedings before the Tribunal, the Revenue has moved an application seeking admission of the following additional ground:- Whether provisions of section 14A of the I.T. Act will be applicable in the event it is held that the interest received by the assessee from its Head Office is not taxable in the hands of Indian Branch Office. 23. After considering the rival submissions and perusing the relevant material available on record, it is observed that a similar addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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