2019 (2) TMI 2043

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....al, Revenue has raised the following Grounds of appeal :- "1. Whether on facts and in circumstances of the case and in law, the CIT(A) is correct in holding that the addition has been wrongly made without appreciating the fact that the PE in India has to be treated as separate entity and the interest payable by the said PE is to be taxed in India in the hands of PE as income. 2. Whether on facts and in circumstances of the case and in law, the CIT(A) is correct in holding that the provisions of section 40(a)(i) do not apply without appreciating that the interest was chargeable to income. 3. The Appellant prays that the order of the Ld. CIT(A) on the above ground(s) be set aside and that of the Assessing officer be restored. 4. The A....

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.... aforesaid expenditure was an allowable expenditure. However, the Assessing Officer observed that since the source of interest earnings by the Head Office was India, then, in terms of Sec. 9(1)(v)(c) of the Act, such interest income received by the Head Office from branches in India was deemed to accrue or arise in India. The Assessing Officer further observed that in such circumstances, the branches automatically become 'representative assessee'/'agent' as per Sec. 163(1)(c) of the Act. In this background, the Assessing Officer referred to Article 11(2)(a) of the India-Japan DTAA and held that the interest income of Rs. 6,82,65,645/- of the Head Office was taxable in India @ 10%. The aforesaid matter was carried in appeal by the assessee b....