SC settles Section 44C debate: Even ‘exclusive’ HO expenses for Indian branches hit by 5% cap

Director of Income Tax Vs American Express Bank Ltd. (Supreme Court of India) The Supreme Court  has authoritatively interpreted section 44C of the Income-tax Act, 1961 and held in favour of the Revenue. The Court ruled that once an assessee is a non-resident and the expenditure qualifies as “head office expenditure” as defined in the Explanation to section 44C, the statutory ceiling applies irrespective of whether such expenditure is “common” or incurred “exclusively” for Indian branches. Rejecting the long-drawn distinction between common & exclusive expenditure adopted by c...