Taxpublishers.in - InterestingDecision/IDDTF_299.htm - Tax Publishers Your Tax Solution Hub

Share via Whatsapp 18 Views


Tax Publishers 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)

Tax Publishers

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)