https://www.taxtmi.com/caselaws?id=211689 A treaty fiction treating a permanent establishment as a distinct enterprise applies only to attribute business profits, and a banking protocol may permit deduction of interest on funds lent to the permanent establishment. On that basis, interest payable by an Indian branch to its foreign head office and overseas branches is deductible in computing branch profits where the treaty so allows. However, the same internal payment is not taxable in India in the hands of the head office unless the treaty or domestic law expressly creates such charge. As the amount was not chargeable to tax in India, no withholding obligation arose and disallowance under the Income-tax Act could not stand. en-us Fri, 30 Mar 2012 00:00:00 +0530 Sat, 02 May 2026 10:56:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=211689 A treaty fiction treating a permanent establishment as a distinct enterprise applies only to attribute business profits, and a banking protocol may permit deduction of interest on funds lent to the permanent establishment. On that basis, interest payable by an Indian branch to its foreign head office and overseas branches is deductible in computing branch profits where the treaty so allows. However, the same internal payment is not taxable in India in the hands of the head office unless the treaty or domestic law expressly creates such charge. As the amount was not chargeable to tax in India, no withholding obligation arose and disallowance under the Income-tax Act could not stand. Case-Laws Income Tax Fri, 30 Mar 2012 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=211689