Bank of America Vs ACIT (ITAT Mumbai)
The ITAT Mumbai disposed of cross-appeals filed by Bank of America and the Revenue concerning Assessment Years 1999-2000 and 2001-02, arising from assessment orders under Section 143(3) of the Income Tax Act, 1961. For AY 1999-2000, the Revenue challenged relief granted by the CIT(A) concerning expenditure incurred by overseas branches, expenditure relating to exempt income, and the computation of deductions under Sections 36(1)(viia) and 44C. The assessee challenged denial of credit for TDS of Rs. 5,42,31,957 deducted on interest payable to its overseas branches.
On expenditure of Rs. 9,48,70,897 incurred by overseas branches, the Tribunal noted two components: NRI desk expenditure of Rs. 2,28,06,032 and data processing cost at Croydon of Rs. 7,20,64,865. Following the assessee’s own case for AY 2000-01, the Tribunal sustained the disallowance of NRI desk expenditure. For the data processing expenditure, the Tribunal relied on the principles stated by the Hon’ble Apex Court in DIT(IT) Mumbai vs. M/s. American Express Bank Lain, Civil Appeal No.8291 of 2015, dated December 15, 2025. The Supreme Court position, as reproduced in the order, required examination of whether expenditure incurred outside India was in the nature of executive and general administration expenditure and fell within the specified categories of the Explanation to Section 44C. Since the factual nature of the expenditure required further examination, the Tribunal restored the data processing cost issue to the AO for determining whether it qualified as “head office expenditure” under Section 44C. Revenue’s Ground No.1 was consequently partly allowed for statistical purposes.
