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TMI Blog2015 (10) TMI 2823X X X X Extracts X X X X X X X X Extracts X X X X ..... hort "the Act"). 2. The appellant before us is a foreign banking company incorporated in Belgium and is tax resident of Belgium. It is carrying on banking business in India on the strength of licence granted by the Reserve Bank of India. For the year under consideration, it filed a return of income on 14/11/2007 disclosing a total income of Rs. 41,78,76,187/-, which was subject to scrutiny assessment, wherein the total income has been assessed at Rs. 42,40,38,700/-. The assessment under section 143(3) r.w. 144C(13) of the Act dated 11/10/2011 was finalized by the Assessing Officer in terms of the directions issued by DRP-1, Mumbai under section 144C(5) of the Act dated 23/9/2011. The appellant had approached the DRP against the variation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with his stand for the earlier Assessment Years 2004-05 to 2006-07. 3.1 In this background, it was a common point between the parties that in Assessment Year 2004-05 vide order dated 14/03/2014 the Tribunal has decided the said issue in favour of the assessee. It was also a common point between the parties that in Assessment Year 2006-07, the Tribunal vide ITA No.5857/Mum/2010 dated 10/4/2015 followed the earlier decision of the Tribunal for A.Y 2004-05 dated 14/03/2014 and held that the data processing cost paid by the assessee does not amount to royalty and, therefore, there was no requirement of deduction of tax at source so as to warrant the application of section 40(a)(i) of the Act. Following the aforesaid precedents, which continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Hon'ble Calcutta High Court in the case of ABN Amro Bank.N.V. vs. CIT, 198 Taxman 376(Cal). It has also been pointed out that in the immediately preceding assessment year of 2006-07 the amount of Rs. 43,68,985/-, was disallowed also on the ground that the requisite tax was not deducted at source and, therefore, the provisions of section 40(a)(i) of the Act were applied. As the relevant tax has been deducted and paid in the course of the impugned assessment year, it is contended that the same be allowed as a deduction in the current assessment year also. We deem it fit and proper to direct the Assessing Officer to apply the precedents in assessee's own case in the past years and rework the income on this aspect accordingly and also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computing total income assessee had claimed deduction of Rs. 1,97,510/- being interest payable under sections 234B & 234C of the Act. The Assessing Officer disallowed the claim on the ground that even interest paid under sections 234B and 234C of the Act is in the nature of payment of income tax. 7. On this aspect the Ld. Representative for the assessee has contended that there is a difference in the nature of payment of income tax vis-à-vis payment of interest under sections 234B & 234C of the Act. In this context, the Ld. Representative for the assessee referred to the judgment of the Hon'ble Bombay High Court in the case of Arthur Anderson & Company vs. Asstt.CIT,324 ITR 240(Bom) and pointed out that the expression 'tax' define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 478 (Gau) has also held that interest is to be understood as part and parcel of the liability to pay tax and is not deductible in terms of section 40(a)(ii) of the Act. The Hon'ble Delhi High Court in the case of Raj Narain Agarwal vs. CIT, 259 ITR 720, following the decision of the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra) held that interest payable to the income tax department under sections 217 and 220 (2) of the Act is not to be allowed as a business expenditure. The Third Member decision in the case of Sandvik Asia Ltd. (supra) relied upon by Ld. Departmental Representative also supports the action of the Assessing Officer denying the deduction for payment of interest under sections 234B and 234C o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Hon'ble High Court contending that the reopening of assessment was bad in law because assessee had disclosed fully and truly all material facts pertaining to assessment. The aforesaid controversy has been addressed by the Hon'ble High Court and the stand of the assessee was upheld, as according to the Hon'ble High Court the invoking of section 147/148 of the Act was invalid having regard to the facts and circumstances of the case. In our considered opinion, the controversy before us has been directly answered by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra) and that the judgment of the Hon'ble Bombay High Court sought to be relied upon by the assessee in the case of Arthur Anderson & Company(supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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