Glimpses of Supreme Court Rulings

12. Director of Income Tax (IT)-I, Mumbai vs. American Express Bank Ltd.

(2025) 181 Taxmann.com 433(SC)

Deduction of head office expenditure in case of non-residents - Section 44C applies to 'head office expenditure' regardless of whether it is common expenditure or expenditure incurred exclusively for the Indian branches - Section 44C is a special provision that exclusively governs the quantum of allowable deduction for any expenditure incurred by a non-resident Assessee that qualifies as 'head office expenditure' - For an expenditure to be brought within the ambit of Section 44C, two broad conditions must be satisfied: (i) The Assessee claiming the deduction must be a non-resident; and (ii) The expenditure in question must strictly fall within the definition of 'head office expenditure' as provided in the Explanation to the Section - The Explanation prescribes a tripartite test to determine if an expense qualifies as 'head office expenditure' - (i) The expenditure was incurred outside India; (ii) The expenditure is in the nature of 'executive and general administration' expenses; and (iii) The said executive and general administration expenditure is of the specific kind enumerated in Clauses (a), (b), or (c) respectively of the Explanation, or is of the kind prescribed under Clause (d) - Once the conditions in (b) referred to ab