ACIT TDS 1(2), MUMBAI V. DEUTSCHE BANK AG, MUMBAI

ITA 4029/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8368 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 01-08-2017
• Assessment Year: misc
• Appeal Filed On: 26-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Keywords: Non-deduction of tax
• Section: 37

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 4029/MUM/2015 ( / ASSESSMENT YEAR: 2012 - 13 ) ACIT TDS 1(2) R. NO. 803, K. G. MITTAL HOSPITAL BLDG, CHARNI RD(W), MUMBAI - 400002 / VS. DEUTSCHE BANK AG 222 KODAK HOUSE, DR. D. N. ROAD FORT, MUMBAI - 400001 ./ ./ PAN/GIR NO. A AA CD1390F ( / APPELLANT ) : ( / RESPONDENT ) ./ I.T.A. NO . 3842/MUM/2015 ( / ASSESSMENT YEAR: 2012 - 13 ) DEUTSCHE BANK AG 222 KODAK HOUSE, DR. D. N. ROAD FORT, MUMBAI - 400001 / VS. ACIT TDS 1(2) R. NO. 803, K. G. MITTAL HOSPITAL BLDG, CHARNI RD(W), MUMBAI - 400002 ./ ./ PAN/GIR NO. A AACD1390F ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. V. RAJGURU / RESPONDENTBY : SHRI NIRAJ SHETH / DATE OF HEARING : 06/12 /201 7 / DATE OF PRONOUNCEMENT : 06/12/2017 2 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT TWO CROSS APPEAL S HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE ARE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 59 , MUMBAI DATED 06.04.15 FOR AY 20 12 - 13 . 2. SINCE, THE FACTS RAISED IN BOTH T HE APPEALS FILED BY THE REVENUE AS WELL AS THE ASSESSEE ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO. 4029/M/15 FOR AY 2012 - 13 . 3. FIRST OF ALL WE TAKE UP REVENUE S APPEAL IN ITA NO. 4029/M/15 FOR AY 2012 - 13 ON THE GROUNDS MENTIONED HEREIN BELOW: - 1. GROUNDS OF APPEAL: - I) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO COMPUTE INTEREST FOR DELAY IN DEPOSIT OF TAX DEDUCTED AT SOURCE U/S 201(IA) OF THE I.T. ACT FROM THE DUE DATE, 3 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG WITHOUT APPRECIATING THAT AS PER CLAUSE (II) TO SECTION 201(IA) OF THE I.T. ACT, INTEREST FOR DELAY SHOULD BE CALCULATED FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTED TO THE D ATE ON WHICH THE TAX IS ACTUALLY PAID.' II) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO LEVY INTEREST FOR TWO MONTHS INSTEAD OF THREE MONTHS FOR DELAY IN DEPOSIT OF TAX DEDUCTED AT SOURCE, WITH OUT APPRECIATING THE LEGAL PROVISIONS OF CLAUSE (II) OF SECTION 201(IA), WHICH CLEARLY STATES THAT ANY PERSON, PRINCIPAL OFFICER OR COMPANY, AS REFERRED TO IN THAT SUB - SECTION, WHO AFTER DEDUCTING TAX FAILS TO PAY THE WHOLE OR ANY PART OF THE TAX AS REQUIR ED BY OR UNDER THE ACT, IS LIABLE TO PAY SIMPLE INTEREST AT ONE AND ON - HALF PERCENT FOR EVERY MONTH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTED TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID.' III) 'ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT WHILE PROCESSING TDS STATEMENT FLIED BY THE ASSESSEE ULS 154, THE SYSTEM HAS RIGHTLY CHARGED INTEREST AS PER THE PROVISIONS OF SECTION 201(IA) OF THE I.T. ACT.' 4 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY AT THE TIME OF THE HEARING OF THE CASE OR THEREAFTER. 3. THE ORDER OF THE CIT(A) BEING ERRONEOUS BE SET ASIDE AND LD. A.O'S ORDER BE RESTORED. 4 . A LL THE ABOVE GROUNDS RAISED BY THE REVENUE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DIRECTING THE AO TO LEVY INTEREST FOR TWO MONTHS, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF BY THIS COMMON ORDER. 5 . AS PER THE FACTS OF THE PRESENT CASE, THE INTEREST WAS LEVIED UPON THE ASSESSEE ON LATE PAYMENT OF TDS OF RS. 4,5 20,534/ - . IN THIS RESPECT, A DETAIL SUBMISSIONS WERE FILED BY THE ASSESSEE WHICH ARE CONTAINED IN PARA NO. 4.1 OF THE ORDER OF LD. CIT(A). LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PASSED THE ORDER. THE OPERATIVE PORTION IS CONTAINED IN PARA NO 4.2 AND THE SAME IS REPRODUCED BELOW: - 4.2 I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSION OF THE APPELLANT AND SYSTEM GENERATED ORDER. IT IS AN ADMITTED FACT THAT THE TAX IS DEDUCTED 5 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG FROM THE PAYMENT MADE TO NON RESIDENT ENTITY. THE ISSUE OF TAXABILITY OF THE SAID AMOUNT IS NOT IN APPEAL B EFORE ME AND THEREFORE THE ADJUDICATION OF THE SAID ISSUE IS NOT WARRANTED. THE AMOUNT OF TAX DEDUCTED BECOMES THE PROPERTY OF THE GOVERNMENT. THE APPELLANT IS NEITHER ENTITLED FOR REFUND OF TAX DEDUCTED NOR IS, ELIGIBLE FOR ADJUSTMENT OF THE SAME AGAINST OTHER SHORT ION DEDUCTIOFLIFL: VIEW OF HONBLE ITAT DECISION IN CASE OF ITO (TDS) \ INDIA VISION SATELLITE COMMUNICATION LIMITED 7 TAXMANN,COM 65 WHEREINITIS HELD THAT ONCE TAX :IS - DEDUCTED AT SOURCE, AMOUNT BECOMES MONEY DUE TO CENTRAL GOVERNMENT AND EITHE R DEDUCTOR OR DEDUC TEE CANNOT APPROPRIATE AMOUNT SO DEDUCTED ON ANY GROUND. HOWEVER, THE AO IS DIRECTED TO RECOMPUTE THE INTEREST OF 2 MONTHS INSTEAD OF 3 MONTHS. THE ARGUMENT OF THE APPELLANT THAT NO TAX WAS DEDUCTIBLE STANDS DISMISSED . 6. WE HAVE PERUSED THE ORDERS PASSED BY LD. CIT(A) AND ALSO CONCEDED THE ORDERS PASSED BY THE CO - ORDINATE BENCH OF HONBLE ITAT IN THE CASE OF OIL & NATURAL GAS COMMISSION VRS. ACIT (2015) 62 TAXMAN.COM 133(AHEMDABAD TRIB) & NAVAYUGA QUAZIGUND EXPRESSWAY PVT. LTD VRS. DCIT (2015) 64 TAXMANN.COM 212 (HYDERABAD TRIB.) WHEREIN IT HAS BEEN 6 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG HELD THAT FOR THE PURPOSE OF CALCULATING INTEREST U/S 201(IA) TERM MONTH MUST BE GIVEN ORDINARY MEANING OF TERM OF 30 DAYS PERIOD AND NOT BRITISH CALENDAR MONTH. THEREFORE W HILE TAKING INTO CONSIDERATION THE FACTS AS WELL AS ARGUMENTS ADVANCED BY BOTH THE PARTIES, WE FIND THAT LD. CIT HAD RIGHTLY DIRECTED THE AO TO COMPUTE THE INTEREST OF 2 MONTHS INSTEAD OF 3 MONTHS. NO CONTRARY JUDGMENT HAS BEEN BROUGHT ON RECORD BEFORE US BY THE LD. DR IN ORDER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE LD.CIT (A). WE FIND NO REASONS TO DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS RECO R DED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WELL REASONED. ACCORDINGLY, WE UP HOLD THE SAME. RESULTANTLY, THESE GROUND RAISED BY THE REVENUE STANDS DISMISSED . 7. IN THE NET RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. 7 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG ITA NO. 3842/M/2015 FOR AY 2012 - 13 . 8 . NOW WE PROCEED TO DECIDE APPEAL FILED BY THE ASSESSEE ON THE GROUND MENTIONED HEREIN BELOW: - 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 59 (HEREINAFTER REFERRED AS 'CIT(A)') ERRED IN UPHOLDING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRALIZED PRO CESSING CELL TDS (HEREINAFTER REFERRED AS 'AO') IN LEVYING INTEREST OF RS.4,486,473 UNDER SECTION 201(IA) OF THE INCOME TAX ACT, 1961 (THE ACT) ON ACCOUNT OF ALLEGED LATE PAYMENT OF TAX DEDUCTED AT SOURCE ON PROVISION MADE FOR VARIOUS CHARGES PAYABLE TO H EAD OFFICE AND OVERSEAS BRANCHES. 2. THE CIT(A) ERRED IN NOT APPRECIATING THAT NO TAX WAS DEDUCTIBLE AT SOURCE ON PROVISION MADE FOR VARIOUS CHARGES PAYABLE TO HEAD OFFICE AND OVERSEAS BRANCHES SINCE THIS REPRESENTS PAYMENT TO SELF AND THEREFORE NOT TAXABL E IN INDIA, CONSEQUENTIALLY NO INTEREST WAS LEVIABLE UNDER SECTION 201(IA) OF THE ACT. 3. BASED ON THE OUTCOME OF THE APPEAL, THE CIT(A) BE DIRECTED TO DELETE INTEREST OF RS.4,9,547 CHARGED UNDER SECTION 220(2) OF THE ACT. THE APPELLANTS CRAVE LEAVE TO ADD TO, ALTER, AMEND, VARY, OMIT OR SUBSTITUTE THE AFORESAID GROUNDS OF 8 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL AS THEY MAY BE ADVISED. 9. ALL THE GROUNDS RAISED BY THE ASSESSEE ARE INTER CON NECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN UPHOLDING THE ACTION OF DCIT IN LEVYING INTEREST U/S 201(IA) ON ACCOUNT OF LATE PAYMENT OF TAX WITH A PLEA THAT NO TAX WAS DEDUCTABLE AT SOURCE ON PROVISION MADE FOR VARIOUS CHA RGES PAYBLE TO HEAD OFFICE AND OVERSEAS BRANCHES AND CONSEQUENTLY NO INTEREST WAS LEVIABLE U/S 201(IA) OF THE ACT, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF BY THIS COMMON ORDER. 10. AT THE VERY OUTSET LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE HONBLE ITAT IN ITA NO. 4841/MUM/2004 FOR AY 1999 - 2000 HAS ALREADY HELD THAT THE INTEREST PAID BY THE INDIAN BRANCH OF ASSESSEE BANK TO ITS HEAD OFFICE AND OTHER BRANCHES OUTSIDE OF INDIA WAS NOT CHARGABLE TO TAX IN INDIA. THEREFORE THE PROVISIONS OF SECTION 195 ARE NOT 9 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG ATTRACTED. THE OPERATIVE PORTION OF THE ORDER OF ITAT IS REPRODUCED BELOW: - 4841/MUM/04 - A.Y.1999 - 2000 ; 3.EFFECTIVE GROUND OF APPEAL IS ABOUT PAYMENTS MADE BY THE ASSESSEE BANK TO ITS ASIA PACIFIC HEAD OFFICE (APHO),HEAD OFFICE (HO) AND CERTAIN OVERSEAS BRANCHES.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE HAD CLAIMED HEAD OFFICE(HO) EXPENSES AMOUNTING TO RS.50.68 CRORES,THAT THE SAID AMOUNT HAD BEEN ADDED BACK WHILE DETERMINING THE TAXABLE INCOME IN INDIA, THAT IN ITS PLACE A DEDUCTION WAS CLAIMED U/S 44C OF THE ACT.HE FURTHER FOUND THAT ASSESSEE HAD CLAIMED THAT SUCH EXPENDITURE WAS PERMISSI BLE WHILE COMPUTING TOTAL INCOME OF INDIAN OPERATIONS, THAT THE EXPENDITURE RELATED TO THE INCOME EARNED IN INDIA.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE LETTER FILED BY IT ON 14.02.2002, AO HELD THAT THE ASSESSEE HAD NOT DEBITED THESE EX PENSES TO THE P & L ACCOUNT,THAT EXPENSES WERE CLAIMED TO HAVE BEEN INCURRED BY THE H.O.,THAT SAID EXPENSES WERE AGAIN CLAIMED TO BE SPECIFIC TO THE INDIAN OPERATIONS, THAT THE CORRECTNESS OF THE CLAIM 10 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG MADE BY THE ASSESSEE COULD NOT BE VERIFIED, THAT THE P URPOSE OF INTRODUCTION OF SECTION 44C OF THE ACT WAS TO COVER THESE TYPES OF EXPENSES,THAT ACCEPTANCE OF THE CLAIM MADE BY THE ASSESSEE WOULD DEFEAT THE VERY PURPOSE OF THE SECTION 44C OF THE ACT. RELYING UPON THE ORDER OF THE AMERICAN EXPRESS BANK LTD. (I TA/7072/ BOM/1990),HE HELD THAT ASSESSEE WAS NOT ENTITLED TO CLAIM THE SAID EXPENDITURE. FINALLY,HE MADE AN ADDITION OF RS.12.17CRORES(IT RELATED EXPENDITURE - RS.10.93 CRORES, SYSTEM APPLICATION AND PRODUCTS (SAP) IMPLEMENTATION CHARGES - RS.3.36 CRORES, SAP OPERATING CHARGES - RS.17.55 LACS,GLOBAL E - MAIL CHARGES PAYABLE TO APHO,H.O. AND CERTAIN OVERSEAS BRANCHES - RS.52.43 LACS) TO THE INCOME OF THE ASSESSEE. 3.1.ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE ASSESSMENT ORDER AS WELL AS THE LETTERS OF THE ASSESSEE DATED 19.12.03,HE HELD THAT EXPENDITURE AMOUNTING TO RS. 10.93 CRORES PERTAIN TO IT APPLICATION, THAT EXPENDITURE OF RS. 52.43 LACS WAS INCURRED FOR CENTRALIZED E - MAIL COMMUN ICATION SYSTEM, THAT EXPENDITURE TO 11 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG THE TUNE OF RS. 3.54 CRORE WAS ASSESSEE SHARE ON ACQUISITION OF SAP AND ITS UTILISA - TION,THAT APPELLANT WAS ALLOWED TO USE THE COMPUTER SYSTEM OF THE H.O. AT VARIOUS PLACES FOR VARIOUS COMPUTER APPLICATIONS BECAUSE OF T HE SAID EXPENDITURE.FAA WAS OF THE VIEW THAT PAYME - NT MADE BY THE ASSESSEE BANK HAD TO BE TREATED AS ROYALTY AND THAT PROVISIONS OF SECTION 40 (A)(I) OF THE ACT WAS APPLICABLE IN THE CASE UNDER CONSIDERATION.HE FURTHER HELD THAT SECTION 195 OF THE ACT REQ UIRED DEDUCTION OF TAX AT SOURCE NOT ONLY AT PAYMENT AS SUCH BUT ALSO AT INCURRENCE OF LIABILITY.FINALLY,HE HELD THAT PROVISIONS OF SECTION 40(A)(I) WERE ATTRACTED IN THE CASE UNDER CONSID - ERATION,THAT ASSESSEE HAD NOT DEDUCTED ANY TAX AT SOURCE,THAT THE APPELLANTS CONTENTION FOR ALLOW - ABILITY OF THE SAID EXPENSES WAS NOT AS PER LAW.HE FURTHER DIRECTED THAT AO SHALL NOT CONSIDER THESE EXPENSES EVEN FOR THE PURPOSE OF ALLOWANCE OF H.O. EXPENSES U/S 44C OF THE ACT. 3.2.BEFORE US, AUTHORISED REPRESENTATIVE( AR) SUBMITTED THAT INDIAN BRANCH WAS NOT A SEPARATE ENTITY OR A SEPARATE ENTERPRISES, THAT SAP WAS ACQUIRED LONG AGO.HE RELIED UPON THE CASE OF SUMI - TOMO MITSUI BANKING CORPORATION. HE ALSO REFERRED 12 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG TO JUDGMENT DELIVERED BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF (332ITR342).DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT ASSESSEE HAD CLAIMED THE EXEMPTION U/S 37 OF THE ACT, THAT THE PAYMENT TO HEADQUARTER WAS NOT TO BE CONSIDERED A PAYMENT TOWARDS CARRYING OUT BUSINESS OF THE ASSESSEE .HE REFERRED TO THE CASE OF FIRST ADVANTAGE PVT.LTD. (ITA/3029/3030/ MUM - 18.05.12).IN THE REJOINDER,AR SUBMITTED THAT FACTS OF THE CASE OF FIRST ADVANTAGE PVT. LTD. (SUPRA) WERE A TOTALLY DIFFERENT,THAT IN SAID CASE THERE WAS QUESTION OF REIMBURSEMENT OF EXPENDITURE, THAT IN THE MATTER UNDER CONSIDERATION PAYMENT HAD BEEN MADE, THAT OUT OF THE 50 CRORE EXPENDITURE CLAIMED IN THE P & L ACCOUNT, AO HAD ALLOWED RS. 38 CRORES (APPROXIMATELY) WHILE FINALISING THE ASSESSMENT. 3.3.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD.WE FIND THAT WHILE DISALLOWING THE CLAIM MADE BY THE ASSESSEE,AO HAD HELD THAT ASSESSEE - BANK HAS NOT DEBITED THE EXPENSES TO P & L ACCOUNT, THAT THE EXPENSES WERE CLAIMED TO HAVE BEEN INCURRED BY THE H.O. WE FURTHER FIND THAT 13 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG EXP ENDITURE WAS PART OF P & L ACCOUNT.FAA HAS RECORDED A CATEGORICAL FINDING THAT ASSESSEE HAD DEBITED THESE EXPENSES TO ITS BOOK OF ACCOUNTS.FAA,WHILE UPHOLDING THE ADDITIONS, HELD THAT PROVISIONS OF SECTION 40(A)(I) OF THE ACT WERE APPLICABLE IN THE CASE UN DER CONSIDERATION,THAT ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE FOR THE SAID PAYMENTS.WE FIND THAT ASSESSEE VIDE IT LETTER DATED 14.02.2002 HAD SUBMITTED BEFORE THE AO THE DETAILS OF OTHER EXPENDI - TURE AMOUNTING TO RS.50.68CRORES INCLUDING THE EXPENDITURE INCURRED FOR IT RELATED EXPENDITURE, SAP IMPLEMENTATION CHARGES,SAP OPERATING CHARGES, GEC AND GLOBAL E - MAIL CHARGES.FROM THE SAID LETTER, IT IS CLEAR THAT H.O. HAD RENDERED SERVICES TO THE ASSESSEE AND DIVIDED THE SAME AMOUNT VARIOUS AMONG VARIOUS BRANCHE S,INCLUDING THE ASSESSEE.PERUSAL OF PAGE NO. 28 TO 31 OF THE PAPER BOOK REVEAL THAT THESE EXPENSES WERE PART OF THE EXPENDITURE INCURRED BY THE ASSESSEE FOR CARRYING OUT BUSINESS IN AN ORGANISED AND SYSTEMATIC MANNER.IN THESE CIRCUMSTANCES, THE ONLY ISSUE WAS TO BE DECIDED IS WHETHER NON - DEDUCTION OF TDS WITH REGARD TO SAID PAYMENTS WOULD RESULT IN DISALLOWANCE OF THE SAID 14 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG EXPENDITURE OR NOT ? WE FIND THAT IN THE MATTER OF FIRST ADVANTAGE PVT. LTD.(SUPRA),RELIED UPON BY THE DR, FACTS OF WERE DIFFERENT.IN TH AT MATTER QUESTION OF REIMBURSEMENT OF CERTAIN EXPENDITURE BETWEEN TWO INDEPENDENT ENTITIES WAS DISCUSSED AND DECIDED,WHEREAS IN THE CASE UNDER CONSIDERATION THERE IS NO QUESTION OF REIMBURSEMENT.WE FIND THAT IN THE CASE OF SUMITOMO MITSUI BANKING CORPORAT ION THE SPECIAL BENCH OF MUMBAI TRIBUNAL(19 TAXMANN.COM364),HAD DISCUSSED THE ISSUE AT LENGTH. IN THAT CASE,AO HAD DISALLOWED THE CLAIM OF THE ASSESSEE FOR NON - DEDUCTION TAX ON ACCOUNT OF INTEREST PAYABLE TO THE H.O. BY INVOKING THE PROVISIONS OF SECTION 4 0(A)(I) R.W.S.195 OF THE ACT. FINALLY,IT WAS HELD THAT THE INTEREST PAID BY THE INDIAN BRANCH OF ASSESSEE BANK TO ITS H.O. AND OTHER BRANCHES OUTSIDE OF INDIA WAS NOT CHARGEABLE TO TAX IN INDIA,THAT THE PROVISIONS OF SECTION 195 WOULD NOT BE ATTRACTED, THA T THERE WAS NO FAILURE TO DEDUCT TAX AT SOURCE FROM THE SAID PAYMENT OF INTEREST MADE BY THE ASSESSEE,THAT THE QUESTION OF DISALLOWANCE OF SAID INTEREST BY INVOKING THE PROVISIONS OF SECTION 40(A)(I) DID NOT ARISE. WE, RESPECTFULLY FOLLOWING THE ORDER OF T HE SPECIAL 15 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG BENCH OF MUMBAI TRIBUNAL, DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 11. WE HAVE GONE THROUGH THE ORDERS PASSED BY HONBLE ITAT AND IMPUGNED ORDER PASSED BY LD. CIT( A), WE FIND THAT LD. CIT(A) HAS NOT DECIDED THE ISSUE OF TAXABILITY OF THE SAID AMOUNT AS THE SAME WAS NOT IN APPEAL BEFORE HIM, THEREFORE LD. CIT(A) HAD NOT ADJUDICATED THE SAID ISSUE. 12. SINCE THIS GROUND HAS BEEN RAISED BEFORE US AND CONSIDERING THE ORDER OF HONBLE ITAT IN ITA NO. 4841/MUM/2004 IN ASSESSEES OWN CASE FOR AY 1999 - 2000, THEREFORE, C ONSIDERING THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO PASS AFRESH ORDER K EEPING IN VIEW THE DECISION RENDERED BY HONBLE ITAT IN ITA NO. 4841/MUM/2004 IN ASSESSEES OWN CASE FOR AY 1999 - 2000 . IT IS NEEDLESS HERE TO MENTION THAT BEFORE PASSING THE ORDER, THE AO SHALL PROVIDE SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. RES ULTANTLY 16 I.T.A. NO. 4029 & 3842 /MUM/201 5 DEUTSCHE BANK AG THESE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE NET RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AND APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DEC, 2017 SD/ - SD/ - ( RAJENDRA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 06 .12 .201 7 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI