TaxTMI 
TaxTMI 
2026 (2) TMI 801
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....ment ("DTAA"). Both the learned representatives invite out attention to the CIT(A)'s lower appellate discussion upholding the Assessing Officer's action as under: "5.1 Ground Nos. 1& 2 5.1.1 Vide these grounds of appeal, the appellant has contended that the AO has erred in holding the receipts aggregating to Rs. 2,02,05,584/- on account of interest on income-tax refund be taxed at a flat rate of 40 percent as opposed to the claim of the Appellant that the same be taxable at the rate of 15 percent in terms of Article 11 of India-Australia Double Taxation Avoidance Agreement. Further, the appellant has contended that the AO has erred in alleging the interest income to be effectively connected to a Permanent Establishment in India without appreciating that the Appellant did not have any Permanent Establishment in India. 5.1.2 The appellant in its ITR has claimed interest on income-tax refund of Rs. 2,02,05,584/- to be chargeable to tax @ 15% under Article 11 of India-Australia Double Taxation Avoidance Agreement. The AO found that the interest on refund received by the appellant pertains to AY 201011 and 2014-15 wherein the appellant had business operations ....
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..... However, such interest may also be taxed in the Contracting State in which it arises and accordingly to the law of that State, provided that where the resident of the other Contracting State is the beneficial owner of the interest the tax so charged shall not exceed 15 per cent of the gross amount of the disinterest. 6. The provisions of paragraphs 1, 2 and 3(a) of this Article shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 (Business profits) or Article 15 (Independent personal services) of this Convention, as the case may be shall apply." 7. We will consider whether there is any merit in the contention of the appellant that the appellant should have been taxed at the rate of 15 per cent on the gross amount of the ....
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....here was the delay and interest was paid under the Act at the statutory rate fixed. So there arises a debt claim and the interest is effectively connected with the permanent establishment on fixed rates. In such an eventuality, Clause 6 of Article 12 provides that the provisions of Article 7, which relate to Business profits, or Article 15 (Independent personal services) of this Convention, as the case may be, shall apply. This will be assessed as business profits and in regard to business profits, the rate of tax is 48 per cent. It is on the said basis that, in fact, the Assessing Officer in the first assessment and also in the further assessment after proceedings under Sec. 147 of the Act had assessed the appellant. This assessment has been upheld by the First Appellate Authority as also by the Tribunal. 9. We would think that in this analysis of the provisions of the Clauses of the Treaty, there is no error as such committed by the Assessing Officer as confirmed by the First Appellate Authority and the Tribunal and, therefore, the questions of law as framed must necessary be answered against the appellant in all the cases and we do so...." Vide the above order,....
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....y of that State or a person who is a resident of that State for the purposes of its tax. Where, however, the person paying the interest, whether the person is a resident of one of the Contracting States or not, has in one of the Contracting States or outside both Contracting States a permanent establishment or fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, owing to a special relationship between the payer and the person beneficially entitled to the interest, or between both of them and some other person, the amount of the interest paid, having regard to the indebtedness for which it is paid, exceeds the amount which might have been expected to have been agreed upon by the payer and the person so entitled in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the amount of the interest paid shall remain taxable according to the law,....
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.... the Indo United Kingdom Double Taxation Avoidance Agreement of Rs. 5,362,717/- and computed the tax payable at Rs. 2976,641/- resulting into claim of refund of Rs. 5,363,973/-. It appears that the assessee has claimed income to be taxable under the head income from other sources by computing income at the rate of 15% under article 12 of the Indo UK DTAA. Assessee submitted before the learned assessing officer, that assessee did not carry out any business activity in India during the year; it does not have any PE in India. Therefore, the interest income earned by it cannot be held to be effectively connected with permanent establishment in India. The learned assessing officer held that the assessee had a permanent establishment in India by way of article 5 (1) of the Double Taxation Avoidance Agreement in the form of a project office in India. The AO further held that the interest income u/s 244A of The Income Tax Act is not covered by article 12 (1) & (2) of the Double Taxation Avoidance Agreement. Hence, he rejected contention of the assessee that interest on income tax refund received u/s 244A of the income tax act is not chargeable to tax in India. He relied on the decision of ....
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.... Rotterdam. The upgraded the rig was to be ready for voyage from Rotterdam by 31 August 2007 for commencement of work under the contract. The contract work was scheduled to commence after November 2007 for 36 months post mobilization of the rig. However, the commencement of execution was delayed. In between reliance permitted the assessee to executed contracts with other companies for undertaking the drilling operations outside India. Thus assessee entered into a tripartite agreement on 23 July 2009 with reliance and others whereby reliance assigned its rights and obligations Under the drilling contract reliance exploration and production for drilling a well in Oman stop the assessee received a letter of intent from Maersk oil Brazil limited for a bareboat charter agreement and service agreement for the employment of the rig in Brazil. Reliance industries Ltd allowed the assessee to enter into a contract with that company and suspended its original agreement by a suspension agreement entered into on 11 June 2010. Consequent to it, the drilling rig started its movement to leave Indian waters on 2 June 2010. It received a port clearance, rivers, and certificate on 5 June 2010. On com....