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TMI Blog2017 (9) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof. Consequently, the question of applicability of Section 115JB did not arise. As rightly pointed out till the insertion of Section 115JB, banking companies were required to prepare their accounts in terms of special acts that they were governed by, and therefore there were no computation provisions as regards such banking companies. The change brought out by Section 115JB was therefore not retrospective. Applicability of rate of tax - Held that:- We find that this issue is covered against the assessee by Explanation 1 to section 90(2), which read as under:- Explanation 1.-For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company. - I.T.A .No. 3707/DEL/2014, 3755/Del/2014 - - - Dated:- 19-9-2017 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Percy Pardiwalla, Sr. Counsel, Nishant Thakur, Surender Bisht For The Respondent : Sh. T. M. Shivkumar, Int. Taxation ORDER PER BENCH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with provisions of Article 7(3) of the India-Japan DTAA and in view of the provisions of section 90 of the Act, the provisions of section 115JB of the Act cannot be applied. 3 Reduction for write back of provision for bad and doubtful debts amounting to ₹ 9,288,687 and depreciation on investment amounting to ₹ 3,400,710 That on the facts and the circumstance of the case and in law and without prejudice to the ground no. 2 above, the Hon ble CIT(A) has erred in not allowing the reduction for write back of provision for bad and doubtful debts and depreciation on investment while computing the book profits under section 115JB of the Act on the following counts: a) The Hon ble CIT(A) has erred in not adjudicating the issue of treatment of write back of provision for bad and doubtful debts and deprecation on investment while computing book profits under section 115JB of the Act. b) The Hon ble CIT(A) has erred in not allowing the reduction for write back of provision for bad and doubtful debts and depreciation on investment in accordance with clause (i) of explanation 1 to section 115JB of the Act ignoring the fact that the Ld. AO has increased the book p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of ₹ 2,39,12,393/-, when it was clearly recorded by the AO that not only the PE of the assessee bank is separate entity for the purpose of taxation but the assessee has also claimed the deduction of the same in the Income tax return. The interest paid by this PE to the Head Office is liable to tax in India. 3. On the facts and in the circumstances of the case and law, Ld. CIT(A) has erred in allowing the deduction on account of Head Office expenditure u/s 44C ignoring the fact that there was no invoice raised and also no debit notes raised. Merely, on deemed basis, no deduction u/s 44C was allowable to the assessee. 3. The Bank of Tokyo-Mitsubishi UFJ, Ltd. was a company incorporated in Japan and was the tax resident of Japan within the meaning of Article 4 of the Agreement for Avoidance of Double Taxation between India and Japan (in short DTAA) during the year under consideration. It was carrying on its banking business in India through its four branches at Mumbai, New Delhi and Chennai during the relevant Assessment Year. These branches of the assessee in India constituted Permanent Establishment (PE in short) of the assessee in India within the meaning of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Disallowance of provision written back for wealth tax while computing book profits under Section 115JB for ₹ 2,69,200 ii. Deferred Bank Guarantee Commission for ₹ 99,64,030 iii. Salary paid to Expatriate employees for ₹ 14,26,64,438 iv. Expenditure on Japanese Food Stuff for ₹ 2,56,598 v. Disallowance of write back of income-tax provisions while computing book profits under section 115JB for ₹ 8,34,30,738 vi. Interest received by HO/Overseas Branches from Indian PE for ₹ 2,39,12,393 vii. Interest received by Indian PE from HO/Overseas Branches for ₹ 48,67,806 viii. Non-applicability of MAT ix. Provision for doubtful debts and depreciation on investment while computing book profits under section 115JB for ₹ 34,00,710 and 9,26,88,687 x. Deduction of Head Office Expenditure as per section 44C of the Act The most of the above additions were similar to those made in past assessment years by the concerned Assessing Officers in the case of the assessee itself which on challenge by way of appeal/writ by the assessee against those additions stood adjudicated by the Appellate Authorities as well as the Hon ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee by the Hon ble Delhi High Court vide order dated 08.04.2016. As relates to Ground No. 3 regarding allowance of deduction under Section 44C of the Act, the Ld. AR submitted that the same is covered in favour of the assessee by DRP directions for AY 2007-08. 8. The Ld. DR relied upon the orders of the TPO and DRP. 9. We have heard the parties and perused the records. 9.1 As relates to Ground No. 1 of the Assessee s appeal, the Hon ble Delhi High Court in Assessee s own case (ITA No. 604/2015 order dated 08.04.2016 held that Salaries paid to expatriates 9. The first question urged concerns the payment of salaries to the expatriates. In deciding this issue in favour of the Assessee, the ITAT has in the impugned common order referred to and relied upon the decision of its coordinate bench at Kolkata in ABN Amro Bank v. JCIT (2005)97 ITD 1(ITAT (Kol). Further the ITAT followed the decision of the Bombay High Court in CIT v. Emirates Commercial Bank Ltd. (2003) 262 ITR 55 (Bom.) where the Bombay High Court approved the view taken by the ITAT. The ITAT agreed that the expenses have been incurred wholly and exclusively by the Indian branch and therefore no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in favour of the assessee. Thus, Ground No. 3 and 4 are dismissed. 9.4 As relates to Ground No. 5 of the Assessee s appeal, the said issue is covered against the assessee by the ITAT, Delhi vide order dated 19.09.2014 for A.Y. 2007-08 2008-09 in assessee s own case. The ITAT held as under: 87. Ground No. 9 is regarding applicability of rate of tax. The assessee s grievance is that ld. DRP and AO did not adjudicate this under the provisions of Article 24 of the DTAA. The contention is that the applicable rate of tax on the income of the assessee attributable to its PE in India cannot exceed the applicable rate of tax (as per the Finance Act for the assessment year) in the case of domestic companies. 87.1 Having heard both the parties, we find that this issue is covered against the assessee by Explanation 1 to section 90(2), which read as under: Explanation 1.-For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company. 88. In view of above explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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