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Salary paid by overseas HO to expatriate employees working exclusively for Indian branch is fully deductible

September 23, 2014[2014] 49 taxmann.com 441 (Delhi - Trib.)/[2015] 152 ITD 796 (Delhi - Trib.)

IT/ILT-I : Where assessee, a Japan based bank, engaged in wholesome banking operations through its various branches in India, paid salaries in Japan to expatriates working in India, in view of fact that expenses had been incurred wholly and exclusively for Indian branch, assessee's claim for deduction of salary expenses was to be allowed

IT/ILT-II : Where assessee, a foreign bank, was engaged in business of giving commercial loans, current interest rate applicable to funds was deductible in case of borrower (PE), however, as far as assessability in hands of lender (HO) was concerned, same had to be excluded on ground of mutuality

IT/ILT-III : Where interest received by PE from deposits kept with its HO abroad was deemed to be income of PE and there was no bar in India-Japan treaty on its taxability then it could not be excluded from computation of income earned by PE

IT/ILT-IV : MAT provisions are not applicable to foreign companies and, therefore, where assessee-company computed its taxable income as per provisions of article 7(3) of India-Japan DTAA, Assessing Officer was not justified in rejecting same and computing assessee's book profits in terms of section 115JB

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