itxa-330-2013 IN HIGH COURT OF JUDICATURE AT BOMBAY rt ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 330 OF 2013 ou Director of Income Tax (IT) I .. Appellant. V/s. Citibank N. A. .. Respondent. C Mr. Tejveer Singh, for Appellant. Mr. Percy Pardiwalla, Sr. Advocate with Mr. Bharat Damodar and Ms. h Sneha Oak i/b. Kanga & Co., for Respondent ig CORAM: M.S.SANKLECHA, & G.S.KULKARNI, JJ. DATE : 11th MARCH, 2015. H P.C: This Appeal under Section 260 of Income Tax Act, 1961 y (the Act), challenges order dated 13th January, 2012 passed by Income Tax Appellate Tribunal (the Tribunal) for Assessment Year ba 1999 2000. 2 Revenue has formulated following questions of law om for our consideration: (a) Whether on facts and in circumstances of case and in law, Tribunal is correct in allowing Guest House Expenses when assessee has failed to furnish any evidence to B warrant its allowability in term of provisions of section 37(1) of IT Act, 1961. (b) Whether on facts and in circumstances of case and in law, Tribunal is correct in holding that payment to Master Card International and Visa Card International without deduction of tax at source is not disallowable u/s. 40(a)(i) in S.R.JOSHI 1 of 5 ::: Uploaded on - 13/03/2015 ::: Downloaded on - 15/02/2016 12:17:01 ::: itxa-330-2013 view of Article 26(3) of Indo US DTAA, when provisions of Article 26(3) were not attracted in case, and rt especially for year in question. ou (c) Whether on facts and in circumstances of case and in law, Tribunal is correct in holding that notional loss arising from unmatured foreign exchange contracts is allowable when loss is neither definite liability nor legal liability as mandated by Supreme Court in decisions in cases of C Bharat Earth Movers 112 Taxman 61 & Keshav Mills Ltd. 23 ITR 230 and in fact is expenditure contingent on happening of event and therefore not allowable in view of decision of Supreme Court in case of Indian Molasses Co. P . Ltd. 37 ITR h 66. Re: Question (a) ig Respondent Assessee had claimed expenditure as H deduction on account of guest house expenses. Assessing Officer disallowed expenditure of guest house expenses in view of bar sub section 4 of Section 37 of Income Tax Act, 1961 (the Act). In y appeal, Commissioner of Income Tax (Appeals) [CIT(A)] deleted ba disallowance on account of guest house expenses as sub section (4) of Section 37 of Act as same was deleted w.e.f 1st April, 1988. om 3 Appeal by Revenue to Tribunal was dismissed in view of fact that sub section 4 of Section 37 of Act was deleted from Act w.e.f. 1st April, 1988. Thus, disallowance of guest house B expenses for Assessment Year 1999 2000 in absence of Section 37(4) of Act was not proper. 4 We find that in view of clear and self evident position of law during subject assessment year viz: absence of Section 37(4) of Act, no fault can be found with impugned order. Thus, no S.R.JOSHI 2 of 5 ::: Uploaded on - 13/03/2015 ::: Downloaded on - 15/02/2016 12:17:01 ::: itxa-330-2013 substantial question of law arises. Accordingly, Question (a) dismissed. rt Re: Question (b) ou Respondent Assessee during subject Assessment Year made payment through Master Card International and Visa Card International being assessment and equipment fees. payments were C made by Respondent Assessee without deducting tax at source. In view of above, Assessing Officer disallowed entire amount of fees remitted, aggregating to Rs.82.33 lakhs in terms of Section 40(a)(i) h of Act. 5 ig In Appeal, CIT(A) upheld order of Assessing Officer holding that Visa Card International and Master Card International H have permanent establishment in India and, therefore, income generated by them is taxable in India. Thus, order of Assessing Officer, disallowing entire fees remitted for failure to deduct tax under y Section 40(a)(i) of Act was upheld. ba 6 On further Appeal by Respondent Assessee, Tribunal by impugned order allowed Appeal of Respondent Assessee. om In allowing its appeal, Tribunal followed its decision in case of Central Bank of India v/s. DCIT 42 SOT 450 wherein on similar facts,it was held that even if no TDS is deducted, payments made to Visa Card B International and Master Card International on account of fees could not be disallowed in view of Article 26(3) of Indo US Double Taxation Avoidance Agreement (DTAA). 7 On reading of decision of Tribunal in Central Bank of India (supra) with assistance of Counsel, we find that question S.R.JOSHI 3 of 5 ::: Uploaded on - 13/03/2015 ::: Downloaded on - 15/02/2016 12:17:01 ::: itxa-330-2013 raised herein is covered by order in Central Bank of India (supra) rendered in context of similar/ identical facts and law. rt 8 Mr. Tejveer Singh, learned Counsel appearing for Revenue ou in support of Appeal states that no appeal has been preferred from decision of Tribunal in Central Bank of India (supra). We find that C neither memo of appeal nor any affidavit by Revenue indicates any reason why this appeal from impugned order is being preferred when decision of Tribunal on identical facts in Central Bank of India h (supra) is accepted and merely followed by impugned order. 9 ig We have repeatedly indicated (see CIT v/s. State Bank of India Income Tax Appeal No. 269 of 2013 rendered on 4 th February, H 2015 ) that whenever impugned order of Tribunal merely follows its earlier orders and Revenue has accepted earlier order by not filing appeal therefrom, should normally also apply in subsequent y orders. This of course unless Revenue brings on record reasons ba which necessitated/ justified filing of appeal from impugned order when no appeal was filed from earlier order which has been followed by impugned order. However, there is nothing on record to indicate om reasons for filing appeal from impugned order when no appeal is filed from order of Tribunal in Central Bank of India (supra). 10 Thus on above ground alone, we see no reason to B interfere with impugned order of Tribunal. Consistent application of law is essential feature/ ingredient of Rule of Law. Accordingly, Question (b) is dismissed. S.R.JOSHI 4 of 5 ::: Uploaded on - 13/03/2015 ::: Downloaded on - 15/02/2016 12:17:01 ::: itxa-330-2013 Re Question (c): rt 11 question as formulated by Revenue has been allowed by Tribunal in impugned order by following decision of its ou Special Bench in DCIT v/s. Bank of Baharain & Kuwait 132 TTJ/ (Mum)/505. Mr. Tejveer Singh, Counsel appearing for Revenue states C that Revenue has not filed any Appeal against decision of Special Bench in case of Bank of Baharain and Kuwait (supra). However, there is no ground made out in appeal memo or in any affidavit as to why h Revenue is preferring Appeal against impugned order on above issue when identical question decided by Special Bench of ig Tribunal in Bank of Baharain and Kuwait (supra) has been accepted by Revenue. Therefore, for reasons indicated while dealing with H Question (b) above, appeal need not be entertained. 12 In any case, Counsel are agreed that identical question y of law as Question (c) above in Income Tax Appeal No.1914 of 2011 ba and 5089 of 2010 by Revenue, this Court by orders dated 22 nd March, 2013 and 1st February, 2013 repeatedly rejected appeal on above issue as it stands covered against Revenue and in favour of om Assessee by decision of this Court in CIT v/s. Bank of India 218 ITR 371. Thus, Question (c) does not raise any substantial question of law. Question (c) dismissed. B 13 Accordingly, Appeal dismissed. No order as to costs. (G.S.KULKARNI,J.) (M.S.SANKLECHA,J.) S.R.JOSHI 5 of 5 ::: Uploaded on - 13/03/2015 ::: Downloaded on - 15/02/2016 12:17:01 ::: Director of Income-tax (IT) -I v. Citibank N. A