1. This appeal under section 260A of the Income-tax Act, 1961 ("the Act"), challenges the order dated January 13, 2012, passed by the Income-tax Appellate Tribunal ("the Tribunal") for the assessment year 1999-2000. The Revenue has formulated the following questions of law for our consideration:
"(a) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is correct in allowing the guest house expenses when assessee has failed to furnish any evidence to warrant its allowability in term of the provisions of section 37(1) of the Income-tax Act, 1961?
(b) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that payment to master card international and visa card international without deduction of tax at source is not disallowable under section 40(a)(i) in view of article 26(3) of the Indo-US DTAA when the provisions of article 26(3) were not attracted in the case, and especially for the year in question.
(c) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that notional loss arising from unmatured foreign exchange contracts is allowable when the loss is neither a definite liability nor a legal liability as mandated by the Supreme Court in the decisions in the cases of
Re : Question (a)
The respondent-assessee had claimed the expenditure as deduction on account of guest house expenses. The Assessing Officer disallowed the expenditure of guest house expenses in view of the bar in sub-section (4) of section 37 of the Income-tax Act, 1961 ("the Act"). In appeal, the Commissioner of Income-tax (Appeals) ("the CIT(A)") deleted the disallowance on account of the guest house expenses as sub-section (4) of section 37 of the Act as the same was deleted with effect from April 1, 1988.
2. The appeal by the Revenue to the Tribunal was dismissed in view of the fact that sub-section (4) of section 37 of the Act was deleted from the Act with effect from April 1, 1988. Thus, disallowance of the guest house expenses for the assessment year 1999-2000 in the absence of section 37(4) of the Act was not proper.
3. We find that in view of the clear and self-evident position of law during the subject assessment year, viz., absence of section 37(4) of the Act, no fault can be found with the impugned order. Thus, no substantial question of law arises. Accordingly, question (a) dismissed.
Re : Question (b)
The respondent-assessee during the subject assessment year made payment to master card international and visa card international being assessment and equipment fees. The payments were made by the respondent-assessee without deducting tax at source. In view of the above, the Assessing Officer disallowed the entire amount of fees remitted, aggregating to Rs. 82.33 lakhs in terms of section 40(a)(i) of the Act.
4. In appeal, the Commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer holding that visa card international and master card international have permanent establishment in India and, therefore, the income generated by them is taxable in India. Thus, the order of the Assessing Officer, disallowing the entire fees remitted for failure to deduct tax under section 40(a)(i) of the Act was upheld.
5. On further appeal by the respondent-assessee, the Tribunal by the impugned order allowed the appeal of the respondent-assessee. In allowing its appeal, the Tribunal followed its decision in the case of Central Bank of India v. Deputy CIT [2010] 42 SOT 450 (Mumbai) wherein on similar facts, it was held that even if no TDS is deducted, the payments made to visa card international and master card international on account of fees could not be disallowed in view of article 26(3) of the Indo-US Double Taxation Avoidance Agreement (DTAA).
6. On a reading of the decision of the Tribunal in Central Bank of India (supra) with the assistance of the counsel, we find that the question raised herein is covered by the order in Central Bank of India (supra) rendered in the context of similar/identical facts and law.
7. Mr. Tejveer Singh, learned counsel appearing for the Revenue in support of the appeal, states that no appeal has been preferred from the decision of the Tribunal in Central Bank of India (supra). We find that neither the memo of appeal nor any affidavit by the Revenue indicates any reason why this appeal from the impugned order is being preferred when the decision of the Tribunal on identical facts in Central Bank of India (supra) is accepted and merely followed by the impugned order.
8. We have repeatedly indicated (see
9. Thus, on the above ground alone, we see no reason to interfere with the impugned order of the Tribunal. Consistent application of law is an essential feature/ingredient of rule of law. Accordingly, question (b) is dismissed.
Re Question (c)
10. The question as formulated by the Revenue has been allowed by the Tribunal in the impugned order by following the decision of its Special Bench in Deputy CIT v. Bank of Bahrain and Kuwait [2010] 5 ITR (Trib) 301 (Mumbai) [SB] : [2010] 132 TTJ (Mum) 505 . Mr. Tejveer Singh, counsel appearing for the Revenue, states that the Revenue has not filed any appeal against decision of the Special Bench in the case of Bank of Bahrain and Kuwait (supra). However, there is no ground made out in the appeal memo or in any affidavit as to why the Revenue is preferring an appeal against the impugned order on the above issue when an identical question decided by the Special Bench of the Tribunal in Bank of Bahrain and Kuwait (supra) has been accepted by the Revenue. Therefore, for the reasons indicated while dealing with question (b) above, the appeal need not be entertained.
11. In any case, the counsel are agreed that an identical question of law as question (c) above in the Income Tax Appeals Nos. 1914 of 2011 and 5089 of 2010 by the Revenue, this court by the orders dated March 22, 2013, and February 1, 2013, repeatedly, rejected the appeal on above issue as it stands covered against the Revenue and in favour of the assessee by the decision of this court in
