J P Morgan Chase Bank Vs JCIT (ITAT Mumbai)
A five-Member Special Bench of the ITAT Mumbai considered whether a reference made to a three-Member Special Bench should be withdrawn because the Bombay High Court had admitted an identical question in the case of HSBC Bank Oman S.A.O.G. The underlying appeal concerns AY 1998-99 of a US-incorporated foreign bank operating through its Mumbai Branch. One issue in the appeal is whether interest received by the Indian Branch from its Head Office is income chargeable to tax, with the assessee relying on the principle of mutuality and the Special Bench decision in Sumitomo Mitsui Banking Corporation [136 ITD 66 (Bom)(SB)]. The Revenue had raised a cross objection concerning applicability of Section 14A if the interest was held non-taxable. A Division Bench, while hearing the appeal, expressed inability to concur with the view taken in Oman International Bank SAOG, where Section 14A had been held applicable in relation to such interest, and consequently sought constitution of a Special Bench. A three-Member Special Bench was constituted, but the Revenue later objected to its continuation because the Bombay High Court had admitted an identical question in HSBC Bank Oman S.A.O.G. The Special Bench referred the issue to a larger five-Member Bench.
