Itxa/899/2013 Of Director Of Income Tax (It) - I v. Oman International Bank, S. A. O. G

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD) NO.1889 OF 2012 Director of Income Tax (IT)-II, Mumbai ..Appellant. V/s. Oman International Bank..Respondent. Mr. Tejveer Singh for the appellant. Mr. P.J. Pardiwala, Senior Advocate with Rajlaxmi Punjabi i/b. M.S. Bondhanwalla for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ.DATED : 26TH FEBRUARY, 2013 P.C. :- 1.In this appeal by the revenue for the assessment year 1996-97, the following questions of law are raised for our consideration:- i)Whether on the facts and circumstances of the case and in law, the Tribunal is correct in holding that the addition has been wrongly made without appreciating the fact that the PE in India has to be treated as separate entity and the interest payable by the Tribunal is correct in holding that the addition has been wrongly made without appreciating the fact that the PE in India has to be treated as separate entity and the interest payable by the said PE is to be taxed in India in the hands of GE as income ? ii)Whether on the facts and circumstances of the case and in law, the Tribunal is correct in holding that the addition is wrongly made without appreciating the fact that the proviso to Section 36(1)(viia) states clearly that deduction of bad debts shall be limited to the amount by which such debt exceeds the balance in the provision account made u/s.36(1)(viia) ? iii)Whether on the fadated 8th Januarycts and circumstances of the case and in law, the Tribunal is correct in holding that impugned amount claimed by the assessee is not a deduction but it is an expenditure and it is not the case of the revenue that these expenditures are not allowable in the regular course of business of the assessee without appreciating the fact that there are no provisions in the Act which allow change in computation of income by the assessee by reasons of modification of account, otherwise than by filing revised return ?case and in law, the Tribunal is correct in holding that impugned amount claimed by the assessee is not a deduction but it is an expenditure and it is not the case of the revenue that these expenditures are not allowable in the regular course of business of the assessee without appreciating the fact that there are no provisions in the Act which allow change in computation of income by the assessee by reasons of modification of account, otherwise than by filing revised return ? (iv)Whether on the facts and circumstances of the case and in law, the Tribunalis correct in holding that section 44C is not applicableand these expenses are allowable u/s.37(1) of the I.T. Act without appreciating the fact that the travelling expenses are incurred on travelling of head office personnel who have travelled to various Indian branches and they are not employees of the Indian Branch ?the Tribunalis correct in holding that section 44C is not applicableand these expenses are allowable u/s.37(1) of the I.T. Act without appreciating the fact that the travelling expenses are incurred on travelling of head office personnel who have travelled to various Indian branches and they are not employees of the Indian Branch ? 2. So far as question (i) is concerned, the question as framed is misconceived. The question as framed is in respect of payment of interest by PE to GE when issue is interest earned by the PE from its head office. The Tribunal by the impugned order allowed the respondent-assessee's claim for deduction on the ground that one cannot earn income from oneself. In view of the above, we see no reason to entertain the question (i) as framed. 3.So far as question (ii) is concerned, counsel for the parties state that the instructions issued by the Central Board of Direct Taxes (CBDT) being instruction No.17/2008 dated 26[th] November, 2008 covers the issue in favour of the respondent-assessee. Thus, we see no reason to entertain question (ii) as proposed. 2. So far as question (i) is concerned, the question as framed is misconceived. The question as framed is in respect of payment of interest by PE to GE when issue is interest earned by the PE from its head office. The Tribunal by the impugned order allowed the respondent-assessee's claim for deduction on the ground that one cannot earn income from oneself. In view of the above, we see no reason to entertain the question (i) as framed. 3.So far as question (ii) is concerned, counsel for the parties state that the instructions issued by the Central Board of Direct Taxes (CBDT) being instruction No.17/2008 dated 26[th] November, 2008 covers the issue in favour of the respondent-assessee. Thus, we see no reason to entertain question (ii) as proposed. 4.So far as question (iii) is concerned, the dispute is, whether the interest expenses are to be allowed in the year in which the expenses accrue or in the year in which the liability was discharged by actual payment. The Tribunal by the impugned order recorded a finding that it is not a case of the revenue that the expenses are not allowable or that this is not incurred in the regular course of business. The objection of the revenue to allowing the claim of the respondent-assessee is that in view of the decision of the Apex Court in the matter of Goetze (India) Ltd. V/s. CIT reported in [2005] 284 ITR 323 (SC) the claim was not made by way of revised return of income. This Court in the matter of CIT V/s. Pruthvi Brokers and Shareholders P. Ltd. reported [2012] 349 ITR 336 (Bom) has considered the decision of the Apex Court in the matter of Goetze (India) Ltd. (supra) and concluded that even if the deduction was not claimed, by filing of the revised return before the assessing officer, such a claim could be made in appeal before the appellate authorities. In the present case, the Tribunal has directed the assessing officer to consider the claim of deduction of additional interest payable on deposits during the assessment year 1996-97 i.e. the assessment year in question. In view of the above, we see no reason to entertain question (iii) as proposed. 5.So far as question (iv) is concerned, we find that the impugned order of the Tribunal has followed the decision of this Court in the matter of CIT v/s. Emirates Commercial Bank Ltd. reported in 262 ITR55 (Bom). In these circumstances, we see no reason to entertain question (iv) as proposed. 6.Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)