9911796707
TMI Blog2012 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ailing to appreciate that interest on income tax refund was effectively connected to the business of assessee and was therefore taxable alongwith other business receipts of the assessee on net basis under domestic law like the other business receipts of the assessee. 2. At the outset of the hearing the Ld. AR pointed out that the issue raised in the appeal is fully covered in favour of the assessee by the decision of Delhi Bench of the Tribunal in the case of the assessee itself for the assessment years 2002-03 and 2003-04. He submitted that copies of these decisions of the Tribunal in ITA Nos. 1372&1090/Delhi/2006 and 1203 & 1660/Delhi/2006 have been made available at page numbers 12 to 14 of the paper book filed on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS from the contract receipt. There is no dispute that the respondent is having permanent establishment (PE) in India. Under these circumstances the AO was justified in applying Article 12(5) which is exception to article 12 (2) of DTAA. As per Article 12(5) of the DTAA read with Article 7 thereof the interest income is subject to tax as business income @ 40%. 4. Considering the above submissions and having gone through the decisions relied upon we find that similar facts and circumstances and on the issue as to whether Article 12(2) of DTAA between India and France will be applicable in the present case to charge the tax @ 10% on the interest received on the refund, the Delhi Bench of Tribunal in the case of assessee itself for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case before us the interest income on the refund of taxes relates to the assessment years 1984-85, 1985-86 and 1986-87. Under these circumstances we are of the view that the Ld. CIT(A) has rightly come to the conclusion that the rate applied by the AO was not justified and the rate applied by the assessee was upheld. For a ready reference para 5 & 6 of the first appellate order are being reproduced herein :- "5. The above grounds of appeal and written submissions have been gone through together with the assessment order dated 30.07.2007. A perusal thereof brings out that the appellant has received interest amounting to Rs. 12,29,850/- on refund of excess taxes from the Income Tax Department. The appellant offered the said inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contended that interest on refund arises sui generis i.e. without any role of the permanent establishment . (iv) More importantly, the interest income on refund of taxes actually relates to the assessment years 1984-85, 1985-86 and 1986-87 relating to cases of expatriates when there was no permanent establishment in India. 6. Keeping in view the foregoing and particularly the ruling of the Authority for Advance Rulings and the decision of the Jurisdictional ITAT in appellant's own case, the rate applied by the Assessing Officer is rejected and the rate applied by the appellant is upheld." 5. The first appellate order on the issue is comprehensive and reasoned one. It is also covered by the decision of the Tribunal in the case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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