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TMI Blog2012 (9) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 - ITA No. 5606/Del/2010 - - - Dated:- 30-7-2012 - SHRI I. C. SUDHIR AND T.S. KAPOOR, JJ. Appellant by : Shri Sukhbeer Choudhary, S.DR Respondent by : Shri Viddr Puri, F.C.A ORDER PER I.C. SUDHIR, J. The revenue has que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 43 of the paper book. The Ld. AR submitted further that the issue raised in the present appeal is also covered by the decision of Special Bench of the Tribunal in the case of ACIT vs. Clough Engineering Ltd. 130 ITD 137 (SB). 3. Ld. DR on the other hand tried to justify the assessment order. He submitted that the facts in the case of ACIT Vs. Clough Engineering Ltd. (supra) before the special bench was different, hence it is not applicable in the present case. He submitted that in that case before Special Bench the DTAA was between India and Australia whereas it is between India and France in the present case. He submitted further that decision of Hon ble Supreme Court in the case of Commissioner Of Income Tax. v. Govinda Choudhury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, also the interest earned by the assessee cannot be held to be related to activity of permanent establishment. Thus cannot be related to Article 12(5) of the DTAA, held the Tribunal. The Ld. AR has also drawn our attention to the order dated 26th August, 2008 of the Hon ble Supreme Court in the case of assessee itself in Civil Appeal No. 5253 of 2008 holding that the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the assessee company as the same was allowed on tax deducted on contract receipts that formed part of business receipts of the assessee company. Against these contentions of the Ld. AO the Ld. ARs have furnished their rebuttals which are as under:- (i) The Hon ble jurisdictional Tribunal in assessee s own case in assessment year 2002-03 upheld taxability of interest on refund from the Income Tax Department @ 10% and not at the tax rate applicable to the total income of the appellant. (ii) In the aforesaid order of Hon ble Tribunal at para 25 thereof there is a reference to the ruling of the Authority for Advance Rulings reported in 236 ITR 637 stating that interest received from Income Tax has not been held to be connected with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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