IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No. 3708/Del/2014 Asstt. Yr.: 2006-07 M/S The Bank of Tokyo Mitsubishi Vs DDIT, Circle-1(1), UFJ Ltd., Jeevan Vihar Building, 3, New Delhi.

Parliament Street, New Delhi-110001.

PAN: AABCT 3880 D APPELLANT RESPONDENT AND ITA No. 3756/Del/2014 Asstt. Yr.: 2006-07 Vs M/s The Bank of Tokyo Mitsubishi UFJ DDIT, Circle-1(1), Ltd., Jeevan Vihar Building, 3, New Delhi. Parliament Street, New Delhi-110001.

PAN: AABCT 3880 D APPELLANT RESPONDENT Assessee represented by Shri Hiten Thakkar, Adv. &

Ms. Ritu Sharma, CA Department represented by Sh. Nikhil Kumar govila, CIT Date of hearing 16.07.2025 Date of pronouncement 13.08.2025

O R D E R

PER SATBEER SINGH GODARA, J.M:

These assessee’s and Revenue’s cross appeals ITA Nos. 3708/Del/2014 &

ITA Nos. 3756/Del/2014, respectively, for A.Y. 2006-07, arise against Commissioner of Income-tax (Appeals)-XXV, New Delhi’s order dated 31.03.2024 [Appeal No. 78/2010-11 (Old A. No. 135/2008-09, CIT(A)-XXIX)], in proceedings u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.

Heard both the parties at length. Case files perused.

2. The assessee’s appeal in ITA No. 3708/Del/2014 raises the following substantive grounds:

“1 Disallowance of salary paid overseas to expatriates of the Appellant working in India by the Head Office and the Indian taxes paid thereon by the Head Office: Rs. 127,955,895 That on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the Ld. AO of not allowing deduction in respect of a sum of Rs. 127,955,895 paid as salaries by the Head Office overseas, in foreign currency, to the expatriates working in India exclusively for the permanent establishment ('PE') of the Appellant in India, on which taxes have been duly deducted/deposited in India, and accordingly the order of the Hon'ble CIT(A) is erroneous in law as well as on facts on the following counts:

a) That the Hon'ble CIT(A) has failed to appreciate that the salary has been paid to the expatriates who are stationed in India and are working exclusively for business operations of the Indian PE of the Appellant and is thus an allowable expenditure as per Article 7(3) of DTAA;

b) That the Hon'ble CIT(A) has erred in observing that the nature of expense is covered under section 44C of the Act, even though, the said amount is incurred exclusively and for direct benefit of Indian operations of the Appellant.

c) That the Hon'ble CIT(A) erred in not appreciating that the allowability of deduction is not dependent upon the entries in books of accounts of the Indian PE.

2 Non-applicability of the provisions of Sec 115JB of the Act relating to Minimum Alternate Tax ('MAT')

That on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the contention of the Ld. AO of Invoking the provisions of 115JB of the Act in the assessment order, and accordingly the order of the Hon'ble CIT(A) is bad in law on the following counts:

a) The Hon'ble CIT(A) has erred in not appreciating the contention of the Appellant that being a banking company, the provisions of section 115JB of the Act is not applicable to the Appellant for the subject year.

b) The Hon'ble CIT(A) has erred in not appreciating the contention of the Appellant that operations of its Indian PE are taxable in accordance with provisions of Article 7(3) of the India-Japan DTAA and in view of the provisions of section 90 of the Act, the provisions of section 115JB of the Act cannot be applied.

3 Taxability of interest received by Indian branches of BTMU from its HO/overseas branches: Rs 13,184,751 That on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in taxing the interest received by the Indian branches of BTMU from its HO/overseas branches amounting to Rs

13,184,751 on the following co