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2010 (12) TMI 340 - HC - Income TaxDeducted tax at source - Deduction - Computation of income - section 40 (a) (i) of the Income Tax Act read with section 195 of the Act - The appellant is a foreign company incorporated in Netherlands and having its principal branch office in India - The head office of the appellant is not liable to pay any tax under the Act - Therefore, there was and still is no obligation on the part of the appellant’s said branch to deduct tax while making interest remittance to its head office or any other foreign branch - The permanent establishment and the head office have to be taken as separate entities for all purposes. But in the making of payment of interest no tax has to be deducted under section 195(1) - If no tax is deductible under section 195(1) section 40(a)(i) of the Act will not come in the way of the appellant claiming such deduction as from its income - Therefore, in the circumstances the appellant would be entitled to deduct such interest paid, as permitted by the convention or agreement, in the computation of its income.
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