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2012 (9) TMI 365 - AT - Income TaxInterest on refund of income tax received by the PE of the assessee - taxability - applicability of Article 12(5) or Article 12(2) of DTAA between India and France - Held that:- Tribunal in the case of the assessee itself for the AY 2002-03 and 2003-04 after detailed deliberation has held that interest on income tax refund is liable to tax @ 10% as per Article 12(2) of DTAA between India and France. It has been observed that assessee is not in the business of obtaining interest income tax refund therefore, the interest is neither derived from nor attributable to the business activity of the assessee. It is merely fall out of the profits earned by the assessee and is an appropriation of profit and when excess amount then what is due under the Act is appropriated, assessee get refund thereto, and when there is a delay in granting such refund, assessee is granted interest thereon which is taxable under the head “income from other sources”. Therefore, interest earned by the assessee cannot be held to be related to activity of PE. Thus cannot be related to Article 12(5) of the DTAA - Decided against Revenue
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