Credit Agricole Corporate & Investment Bank v. ACIT

INCOME TAX ACT, 1961

--Business expenditure--AllowabilityInterest paid by assessee bank to HO/overseas branches--The assessee-bank contended that CIT(A) was not justified in not directing the AO to allow a deduction for the interest paid by the India Branch to the HOI overseas branches on the basis that the provisions of section 40(a)(i) are applicable. The assessee submits that the provisions of section 40(a)(i) are not attracted as the interest payment to the HOI overseas branches amounts to a payment to 'self'. The assessee prays that the AO be directed to allow a deduction for the interest payment. Held: Taxing the interest income received from HO/Overseas branches, the natural consequence is that the interest paid by the assessee to its HO/Overseas branches would become deductible. The AO was, therefore, directed to grant deduction for the same.

Income Tax Act, 1961, Section 37(1)

Income Tax Act, 1961, Section 40(a)(i)

Followed:the Tribunal in assessee's own case for Assessment Year 2002-03 vide order dated 2-3-2014 in ITA No. 4471/Mum/2009 and Sumitomo Mitsui Banking Corpn. v. Dy. DIT 136 ITD 66.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2004-05

INCOME TAX ACT, 1961

--Income--ChargeabilityProfit on revaluation of unmatured forward forex contracts--The AR of the assessee has submitted that the loss on revaluation was disallowed by the AO, in the previous assessment year but has been allowed by the tribunal therefore on the same analogy the profit arising on revaluation has to be taxed. However, the AR has submitted that taxing of the profit is subject to the final out come on the issue of loss. Held: Having regard to the facts that the loss on revaluation of unmatured forward forex contracts had been allowed by this tribunal in the earlier years, i.e., 1998-99 then the natural corollary would be that the profit arising on revaluation of the unmatured forward forex contract was liable to be taxed as income. Following the earlier order of this Tribunal in assessee's own case, this issue was decided against the assessee and consequently, the profit arising on revaluation of unmatured forward forex contract was liable to be taxed as income.

Income Tax Act, 1961, Section 4

Followed:Tribunal in assessee's own case for assessment year 2003-04.

REFERRED :

FAVOUR : Against the assessee.

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