Salary paid to expatriate fro Head Offie to Branch was an expenditure to be fully allowed without restriction of section 44C of the Act


Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
It is, thus, evident that DTAA recognizes the fact that the amendments made in the IT Act are not affected in so far or they are not in conflict with the specific provisions of the DTAA. Therefore we are of the view that the amendment made in section 90(2) by way of insertion of explanation is applicable in so far as it is not in conflict with the provision of DTAA. In the context of amendment made in the section 90 w.r.e.f. 1.4.1962 it is useful to quote para 49 in the ABN Amro Bank NV case (supra) wherein Hon’ble ITAT has quoted from the decision of Hon’ble SC in Gramophone Co. of India Ltd. vs. Birendra Bhadur Pandy & Ors ACR 1984 SC 667. 49. Before considering the claim of the assessee in the light of the amendment of section 90 with retrospective effect from 1st April, 1962, we consider it useful to keep in mind the applicability of the Indian tax laws vis-à-vis DTAA with the foreign country. In this connection, reference to the decision of the Hon’ble Supreme Court in the case of Gramophone Co. of India Ltd. vs. Birendra Bahadur Pandy & Others. AIR 1984 SC 667 is relevant. In this case, their Lordships of the Hon’ble Supreme Court held that in the event of conflict between international law, the Court must follow municipal law. The relevant para 5 is quoted hereunder for the sake of convenience.

Citation :
Shinhan Bank (Erstwhile Chohung Bank), Wockhardt Towers, 5th Floor, West Wing, Bandra Kurla Complex, Bandra (East) Mumbai -400 001 ....…. Appellant Vs The Deputy Director of Income-tax (International Taxation)- 1(2), Scindia House, Ground Floor, Ballard Estate, Mumbai -400 020 ....… Respondent

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