Refund of interest on Income tax from erstwhile
existing PE - whether business income or interest income taxable under section
Article 12 of Indo France DTAA
Facts:
Assessee received interest from refund of income tax
pertaining to years when a PE (Permanent Establishment) then existed for them.
This interest was also allegedly held as business income as arising out of a
then existent PE thus taxable at 40%. Assessee's plea was the interest was to
be taxed aa per Article 12 of Indo France DTAA at 10% as the interest was
not connected to the PE. On appeal by assessee post failure with DRP -
Held in favour of the assessee that the interest was
taxable only at 10% as per Article 12 of Indo France DTAA. The
interest was not connected to the PE as it was out of taxed income/income
available for distribution.
Applied:
(i) ACIT v. Clough Engineering Ltd (2011) 130 ITD 137 (Del-Trib)
: 2011 TaxPub(DT) 1015 (Del-Trib).
(ii) Clough Engineering Ltd v. ACIT [ITA No. 4771 and
4986/Del/2007, dt. 13-4-2017)] / (2017) 83 taxmann.com 170 (Delhi
Tribunal).
(iii) Aker Solutions India SDN BHD v. DCIT [ITA No.
1004/Mum/2022, dt. 7-11-2022].
(iv) MSC Mediterranean Shipping Company, S.A. v.
DDIT(IT) (2015)154 ITD 478 (Mum-Trib) : 2015 TaxPub(DT) 1026 (Mum-Trib) - Approved
by Hon'ble Bombay HC (ITA No. 896 of 2016, dt. 14-1-2019).
(v) DHL Operations BV v. DDIT [ITA No. 183/Mum/2010, dt.
21-9-2011] - Appeal filed by Revenue dismissed by Hon'ble Bombay HC (ITA
No. 431 of 2012, dt. 17-7-2014).
(vi) DIT(IT) v. Credit Agricole Indosuez (2015) 377 ITR
102 (Bom-HC) : 2015 TaxPub(DT) 3813 (Bom-HC).
(vii) International Global Networks BV v. DDIT (2012) 50
SOT 433 (Mum-Trib) : 2012 TaxPub(DT) 1994 (Mum-Trib) - Issue not challenged
by the department before the Hon'ble Bombay HC (ITA No. 1579 of 2012, dt. 12-12-2014).
(viii) Transocean Offshore International Ventures Ltd v.
DCIT(IT) [ITA No. 5895/Del/2017, dt. 28-1-2022] : 2022 TaxPub(DT) 1517
(Del-Trib).
(ix) ACIT(IT) v. Baker Hughes Singapore Pte [ITA No.
5337/Del/2018, dt. 8-2-2022]
Ed. Note:
Interestingly other two appeal points on validity of AO order post DRP and MFN
clause applicability were found otiose as main ground stood adjudicated.
Case: Corning SAS
India Branch Office v. Dy./Asstt. CIT 2024 TaxPub(DT) 681 (Del-Trib)