TMI Blog1998 (11) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... vered within the terminology debt-claims of every kind , as provided in clause 5 of article 12 of the Double Taxation Avoidance Agreement between India and United Kingdom ( DTA ) ? 2. Whether, on the facts and circumstances of the case, described in annexure-2, interest of ₹ 30,24,576 under section 244/243 of the Income- tax Act, 1961 ( Act ), paid by the revenue authorities along with tax refunds due to ABC during assessment year 1998-99, would constitute income from debt-claims of every kind , and, therefore, qualify as interest as defined in clause 5 of article 12 of the DTA ? The facts of the case as stated in the application are that ABC is a large chemical company having a diversified portfolio of manufacturing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase is that the interest on tax payable relating to the assessment year 1970-71 given by the Income-tax Department should be taxed in accordance with the provisions of the Double Taxation Avoidance Agreement between India and the United Kingdom. It has been stated that in the past the income of ABC has been consistently taxed according to the provisions of the DTAA. Our attention was drawn to article 12(2) of the DTAA. Article 12 in so far it is relevant for the purpose of this case is set out hereinunder (see [1994] 206 ITR (St.) 235, 247) : 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may also be taxed in the Contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 6 will only apply when it can be shown that the applicant carries on business in India and the interest arose through a permanent establishment situated in India or performs in India any independent personal services from a fixed base situated in India. The debt claim in respect of which interest was paid must also be shown to be connected with such permanent establishment or fixed base. None of the aforesaid provisions of paragraph are attracted in the applicant s case. The applicant does not have a permanent establishment in India. The interest amount in dispute has not arisen out of any business operation in India. It is statutory interest granted on delayed refund under the provisions of section 244/243 of the Income-tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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