Guarantee commission from Indian subsidiaries for default risk taxed on accrual, but remanded to check Art.7 business profits/PE

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....Guarantee commission received from Indian subsidiaries for bearing default risk was held to accrue/arise in India under Explanation 1(a) to s.9(1)(i), rejecting its characterization as "interest" under Art.11 or "other income" under Art.22 of the India-Japan DTAA; consequently, it was treated as taxable in India on domestic law accrual principles. However, since the authorities had not examined whether the recipient carried on a guarantee business so that the receipt could constitute "business profits," the matter was remitted to the AO to test Art.7 applicability, in which event absence of a PE would render it non-taxable. Applying consistency, the rate was directed at 10% (not 40%) with credit for TDS. - ITAT....