Assessee, a non-resident banking company incorporated in UAE, carrying on banking business in India through its branches. Assessee claimed deduction of head office expenses allocated to its PE in India in full.  Assessing Officer held that head office expenses were allowable in terms with restrictions imposed under section 44C and assessee was entitled to get deduction at restricted rate of 5 per cent of average adjusted total income. CIT(A) up held the order of the AO. On appeal the Tribunal held that  amendment brought to article 7(3) by way of protocol providing for limitations or restrictions on deduction of expenses would not apply retrospectively hence prior to its amendment by protocol dated 28-11-2007, deduction of expenses attributable to PE was to be allowed fully without applying restrictions imposed under section 44C.Tribunal also held that the  expenditure incurred outside India exclusively for operations of Indian branches would not fall within ambit of section 44C and, hence, would be allowable in full. (AY. 2002-03)