Bank of India Vs ACIT (ITAT Mumbai)
Bank of India Gets Major Relief: ITAT Mumbai Deletes s.14A Disallowance, Allows Carry-Forward Foreign Tax Credit; Foreign Branch Profits Still Taxable
ITAT Mumbai (I Bench) in Bank of India vs ACIT & cross-appeal (ITA Nos. 1397 & 1549/Mum/2023, AY 2013-14, order dated 23.12.2025) has delivered a partly favourable ruling for the Bank, granting substantial relief on s.14A disallowance and foreign tax credit (FTC) issues, while upholding taxation of foreign branch profits in India.
On Section 14A, the Tribunal deleted the disallowance of ₹10.87 crore sustained by CIT(A), holding that the exempt income arose from shares held as stock-in-trade and following binding precedents including Maxopp Investment (SC), State Bank of Patiala (P&H HC), South Indian Bank (SC) and earlier orders in Bank of India’s own case. It held that no disallowance u/s 14A is warranted where dividend is incidental to banking business.
On foreign branch income, ITAT followed its own earlier decisions and held that profits of overseas branches are taxable in India, subject to credit of foreign taxes, relying on CBDT Notification dated 28.08.2008 and decisions such as Tecnimont and prior Bank of India rulings. Accordingly, the Bank’s plea for outright exclusion u/s 90 was rejected.
However, on the critical issue of foreign tax credit of ₹182.64 crore pertaining to AY 2012-13, which could not be utilised earlier due to losses, ITAT granted significant relief. It held that:
