JP Morgan Chase Bank Vs ACIT (ITAT Mumbai)
The ITAT Mumbai decided cross appeals filed by the assessee and the Revenue for Assessment Years 1997-98, 2000-01 and 2001-02 against orders of the CIT(A). Both parties submitted that all issues were identical to those decided by the Tribunal in the assessee’s own case for Assessment Year 1999-2000. The Tribunal found that no distinguishing facts had been brought on record and followed its earlier order dated 12.06.2026.
On the assessee’s appeals, the Tribunal allowed the claim relating to interest received by the Indian branch from its Head Office and overseas branches. Following its earlier decision, it held that the Head Office and branch constituted the same legal entity, the transactions were internal dealings, and the impugned interest could not be taxed under Sections 9(1)(v) or 9(1)(i). It also held that the separate enterprise fiction under the DTAA was limited to profit attribution and did not create taxable income from transactions with oneself.
The Tribunal also allowed deduction of hub expenses incurred towards centralized banking support services rendered by overseas hubs. It observed that the services were operational and directly connected with the Indian banking business, supported by agreements, RBI approvals and allocation workings. The Tribunal held that these expenses represented direct charges for specific services and were allowable under Section 37(1), and did not constitute “head office expenditure” governed by Section 44C.
