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2015 (5) TMI 1036 - HC - Income TaxInterest paid on refund - treated as a business income taxable at 42 per cent OR 15 per cent. as provided in paragraph (2) of article 12 of the DTAA between India and the United Kingdom - Held that:- The words "in connection with" are relatable to the provision of services and facilities of supply of plant and machinery. We would think that it will be impermissible being too farfetched to include the amount received from the Income-tax Department in the circumstances which we have already set out as falling within the same. No doubt, a question may arise as to whether after providing for a deeming provision in sub-section (1) providing that notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, 10 per cent. of the amounts in sub-section (2) shall be deemed to be the profits and gains chargeable to tax and yet the amount under clause (6) of article 12 of the Treaty is to be taxed as business profits. But we also asked the learned counsel for the Revenue whether the tax is premised under section 28, or is taxable under section 56 (the income from other sources), the answer was, it is under section 56 of the Act. Learned counsel for the Revenue would submit that the appellant had been taxed under clause (6) of article 12 of the Treaty. Income-tax Appellate Tribunal was legally justified in upholding the order of the learned Commissioner of Income-tax (Appeals) and of the Assessing Officer that the interest paid to the assessee on its refund is a business income and, therefore, it is taxable at 42 per cent. instead of 15 per cent. as provided in paragraph (2) of article 12 of the DTAA between India and the United Kingdom
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