The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has granted relief to the Bank of Nova Scotia by allowing the deduction of interest paid by its Indian branch to its Head office.
The assessee is a banking company incorporated in Canada. It had obtained a license from the RBI to carry out banking activities in India. The assessee (Bank of Nova Scotia ‘BNS’) has been operating in India through branches in Mumbai, Delhi, Bangalore, Coimbatore and Hyderabad
The Indian branches of the assessee bank has paid interest of Rs.591, 28,408/- to the head office/overseas branches. The Assessing Officer had not allowed the deduction in respect of payment of interest to the HO.
The assessee filed an appeal before the Commissioner of Income Tax (Appeals). The CIT (A) has allowed the deduction of interest payment made by the Indian branches to the H.O after following the decision of Calcutta High Court in the case of ABN Amro Bank
Mr. Nishant Thakkar representing the assessee submitted that similar issue on identical facts has been adjudicated by the ITAT in the case of the assessee itself for the earlier years in favour of the assessee
The bench noted that the relating to interest paid by Indian Branch to Head Office, the Authorized Representative of the assessee submitted that similar issue was considered by the Tribunal in appeal by the Revenue in Assessment Year 2002-03 (supra). The Tribunal decided the issue in favour of assessee and dismissed the ground raised in appeal by the Revenue. There is no change in facts in the impugned Assessment Year.
The two member bench of the tribunal comprising Vikas Aswathy (Judicial member) and Amarjith Singh (Accountant member) allowed deduction of interest paid by the Indian branch to head office. Accordingly, this ground of appeal of the revenue was dismissed.
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