Expenses Incurred Solely for Indian business do not fall u/s 44C of Income Tax Act on Deduction of Head Office Expenses for Non-Residents: Delhi HC [Read Order]
![Expenses Incurred Solely for Indian business do not fall u/s 44C of Income Tax Act on Deduction of Head Office Expenses for Non-Residents: Delhi HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/10/Expenses-Incurred-Solely-for-Indian-business-Income-Tax-Act-Deduction-Expenses-Indian-business-Head-Office-Expenses-for-Non-Residents-Delhi-HC-taxscan.jpg "Expenses Incurred Solely for Indian business do not fall u/s 44C of Income Tax Act on Deduction of Head Office Expenses for Non-Residents: Delhi HC [Read Order]")
The Delhi High Court recently ruled that the expenses incurred solely for Indian business do not fall under Section 44C of the Income Tax Act, 1961 on deduction of head office expenses for non-residents. The respondent in the present matter is Standard Chartered Grindlays Pty Ltd, By the present appeal, the challenge is laid to the order passed by the Income Tax Appellate Tribunal...
The Delhi High Court recently ruled that the expenses incurred solely for Indian business do not fall under Section 44C of the Income Tax Act, 1961 on deduction of head office expenses for non-residents.
The respondent in the present matter is Standard Chartered Grindlays Pty Ltd, By the present appeal, the challenge is laid to the order passed by the Income Tax Appellate Tribunal [“the Tribunal”]. The record showed that the Assessing Officer (AO) has disallowed the expenditure incurred by the respondent/assessee for the Indian business outside India. The Tribunal has found, as a matter of fact, that the expenses in issue which were disallowed were attributable to the business in India.
It was the Tribunal’s view, that the cost/expenses directly concerning the Indian business would not be subjected to the provisions of Section 44C of the Income Tax Act.
Ruchir Bhatia, senior standing counsel who appeared on behalf of the respondent/revenue, placed on record the certificate issued by KPMG which according to us, will shed light on the issue at hand.
The statement of the auditor attached to the certificate shows that for the period ending on 31.12.2002, out of the gross receipts of USD 66,561,000/-, the cost directly attributable to India were advisory and business support costs and IT costs, amounting to USD 228,000/- and USD 1,469,000/- respectively. The total of these costs in USD would be 1697000. Thus, the cost attributable to India, at the exchange rate of Rs. 48.50 per USD, would amount to Rs. 51,440,312/- for the relevant period.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “Clearly, these expenses do not fall within the ambit of Section 44C, which relates to the deduction of head office expenses in case of non- residents. Therefore, in our view, no substantial question of law arises for consideration.”
To Read the full text of the Order CLICK HERE
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