TaxTMI 
TaxTMI 
2024 (10) TMI 1817
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.... the direction of the Ld. Dispute Resolution Panel (DRP) dated 22.09.2023. The grounds raised by the assessee in its appeal are reproduced as under: Ground No. 1 - Erroneous conclusion of the Appellant constituting a 'Business Connection' under Section 9(1)(i) of the Income-tax Act, 1961 (the 'Act') and Permanent Establishment (PE') under Article 5 of the India-Singapore Tax Treaty (Tax Treaty') in India 1.1 On the facts and circumstances of the case and in law, the Assessing Officer ('AO') erred in concluding and the Dispute Resolution Panel ('DRP') erred in confirming that the Appellant has a Business Connection under Section 9(1)(i) of the Act and PE under Article 5 of the Tax Tre....
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....Act 3.1 On the facts and circumstances of the case and in law, the AO erred in concluding and the DRP erred in confirming that the interest on Income-tax refund is taxable as per the normal provisions of the Act instead of Article 11(2)(b) of the Tax Treaty without appreciating that the interest on Income-tax refund is attributable to the Appellant and not to the alleged PE in India. 3.2 The Appellant prays that the conclusion of taxation of interest on Income-tax refund as per provisions of the Act is erroneous, unwarranted and should be deleted. 2. Briefly stated facts of the case are that the assessee is a company incorporated under the laws of Singapore and is engaged in the business of provision of supply chain man....
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....axable in India. The Assessing Officer further held that the Indian AE of the assessee constitute Permanent Establishment (PE) in India within the meaning of Article 5(1), 5(2), 5(8) of the India-Singapore DTAA. The Assessing Officer, accordingly, following earlier years assessments orders, attributed 55% of the revenue in respect outbound transaction amounting to Rs. 4,28,63,752/- and 25% of the revenue from the inbound transaction amounting to Rs. 28,75,19,543/- totaling to Rs. 33,03,83,295/- as attributable to the assessee and applying global profitability rate of 4.4% computed profit of Rs.1,46,69,018/- and was added in the hands of the assessee. The Assessing Officer also held that interest received on the Income-tax refund was taxable....
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.... in ITA No. 7171/Mum/2017, 7319/Mum/2018 and 6631/Mum/2019 for assessment years 2013-14 to 2015-16. Thereafter in ITA No. 1220/Mum/2021 for assessment year 2017-18 and in ITA No. 2243 & 2244/Mum/2022 for assessment years 2018-19 and 2019-2020 also this ratio has been followed and it is held that since, the Indian AE which has been held to be dependable agent permanent establishment, has been remunerated at arm's length price, hence no further attribution of profit is required in the case of the assessee. We are of the opinion that unless any activities or the transaction of the assessee with Indian AE i.e. DAPE, other than the transactions which are covered by the transfer pricing study are observed by the AO and no adjustment had been ....
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....le as per the normal provisions of the Act. The Ld. DRP also upheld the finding of the Assessing Officer. 5.1 Before us, the Ld. counsel for the assessee relied on the decision of the Co-ordinate Bench of the Tribunal in the case of ACIT v. Clough Engineering Ltd. [2011] 11 taxmann.com 70 (Delhi) (SB) and Co-ordinate Bench Tribunal in the case of Dy. CIT v. Marubeni Corporation [2022] 139 taxmann.com 367 (Mumbai- Trib.). 5.2 We have heard rival submission of the parties and perused the relevant material on record. The issue of interest arising from the Income-tax refund has been dealt by the Co-ordinate Bench of the Tribunal in the case of the Clough Engineering Ltd. (supra) and held that such interest was not effectively connected wi....
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.... may add that we do not venture to say that the interest income has to be necessarily business income in nature for establishing the effective connection with the PE because that would render provision contained in paragraph 4 of Article XI redundant. Thus, there may be cases where interest may be taxable under the Act under the residuary head and yet be effectively connected with the PE. The bank interest in this case is an example of effective connection between the PE and the income as the indebtedness is closely connected with the funds of the PE. However, the same cannot be said in respect of interest on income- tax refund. Such interest is not effectively connected with PE either on the basis of asset-test or activity-test. Accordingl....