ITAT held that set-off of permanent establishment (PE) loss...

ITAT held that set-off of permanent establishment (PE) loss against interest income is permissible under the tax treaty. The tribunal interpreted Article 11(2) as allowing computation of income per domestic law provisions, enabling inter-head loss adjustment. The assessee's claim of set-off was deemed valid, with the tribunal emphasizing that "gross" interest refers to income without expense deductions. Additionally, the tribunal recognized the alternative claim under Section 115A(1)(a)(iiaa), finding the external commercial borrowing (ECB) loans compliant with RBI regulations, thus qualifying for a concessional tax rate of 5% with applicable cess and surcharge.