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TMI Blog2024 (10) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... gn currency account and kept in India for the Indian business of the assessee bank. The benefits reaped by the India branch or Permanent Establishment in India have been accounted for as Indian income and why the deduction of expenditure should not be allowed as expenses incurred for procurement of business cannot be understood as Head Office expenses - HELD THAT:- The expenses were incurred for the purposes of inviting NRIs to open deposits in the Indian branches of the respondent assessee. The aforesaid initiative was predicated upon the circular of the RBI itself which is dated 16 October 1991. Since this was expenditure which was incurred solely for the purpose of the business of the respondent assessee in India, we find no merits in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All these applications shall stand disposed of. ITA 563/2007, ITA 566/2007, ITA1296/2007, ITA 1297/2007, ITA 1300/2007, ITA 1344/2007, ITA 615/2009, ITA 629/2009, ITA 953/2018, ITA 1025/2018, ITA 387/2019, ITA 584/2023, ITA 587/2023 ITA 589/2023 1. The instant appeals impugn the orders of the Income Tax Appellate Tribunal [ Tribunal ] and principally raise a question of allowability of expenses incurred by the respondent/assessee for garnering FCNR deposits which were to be maintained at its Indian branches. The second question which is raised is in respect of credit card commission and with those being in relation to cards which had been issued by the foreign branches of the respondent and used in India. 2. We take note of the common char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in garnering FCNR deposits is concerned, we note that the Tribunal has while dealing with this aspect held as follows: - 7.2 During the hearing the Ld. CIT (DR) stated that the CIT (Appeals) had erred in holding that the expenses incurred at places like Singapore, Hong-Kong etc could not be treated as a part of head office expenses and that the same were to be allowed after obtaining the exact details from assessee despite the fact that such expenses were not even debited in the accounts of Indian Branch. In any case the AO had separately allowed a deduction at 5% under Sec. 44C on account of Head Office expenses and therefore no separate deduction was allowable for expenses incurred outside India. 7.3 The assessee's counsel explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that 'Head Office expenses' as defined in section 44C referred to 'executive and general administration expenditure. Special expenses for soliciting foreign currency deposits from NRI customers were not in the nature of executive and administrative expenses as contemplated under sec.44C of the Income Tax Act, 1961. It was further submitted that even if these expenses were treated as head office expenses, they were still fully allowable. The courts of law have held that no part of head office expenses which were exclusively India-centric were disallowable in law. For this Reliance was placed on the judgement of the Calcutta High Court in Rupenjuli Tea Company v. CIT [186 ITR 301] and Mumbai High Court in the case of CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India for the Indian business of the assessee bank. The benefits reaped by the India branch or Permanent Establishment in India have been accounted for as Indian income. We, therefore, see no reason as to why the deduction of expenditure should not be allowed. These expenses incurred for procurement of business cannot be understood as Head Office expenses and the learned Assessing Officer, therefore, erred in treating them as head Office expenses within the meaning of section 44C of the Act . We, therefore, direct the learned Assessing Officer to allow the assessee deduction of actual expenditure basis and for that purpose if necessary the learned Assessing Officer may withdraw corresponding deduction allowed, if any under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fees in respect of such transaction are not taxable in India. We, therefore, uphold the deletion of addition of Rs. 10 crores. 6. Undisputedly the credit cards had been issued by the foreign branches of the respondent. It was in the aforesaid backdrop that the Tribunal noted that the charges are received by the foreign branch for providing and extending a credit line to the account holder outside India. It has further been noted that the amount payable by those card holders would clearly be a debt incurred outside India. It is in the aforesaid conspectus of facts that it ultimately came to hold that the fee in respect of such transactions would not be taxable in India. We find no justification to take a contrary view. 7. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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