2014 (7) TMI 1153 - HC - Income Tax

Interest on income-tax refund and fixed deposits with the bank - whether liable to tax with reference to article 7 read with paragraph (4) of article 11 or paragraph (2) of article 11 of the Indo-Australia Double Taxation Avoidance Agreement - Held that - The Tribunal 2011 (9) TMI 1006 - ITAT MUMBAI has assigned cogent and satisfactory reasons as to why the Assessing Officer could not have undertaken the exercise in the limited jurisdiction. Even otherwise, on merits as well, the Tribunal s view cannot be said to be perverse. The Tribunal in the peculiar facts and considering the double taxation avoidance agreement rendered a finding as to the interest on income-tax refund is not effectively connected with permanent establishment either on the basis of asset-test or activity-test. Accordingly it is held that this part of the interest is taxable under para 2 of Article 11. - Decided in favour of assessee.

Summary

The Bombay High Court dismissed the appeal for the assessment year 2003-04 as the Tribunal's order did not raise any substantial question of law. The Tribunal provided satisfactory reasons for its decision, which was not considered perverse. The appeal was dismissed with no costs.