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TMI Blog2018 (12) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and has to be taxed as per beneficial provisions of the treaty between the two countries. In view of the decisions in the case of Clough Engineering Ltd. (supra) and the stand taken by the revenue in assessee’s own case for earlier years, we are of the considered opinion that the interest earned on income-tax refund has to be taxed as income from other sources as per Article 12(2) of the DTAA between Indian and UK at 15% on gross basis. With this view of the matter, we uphold the contention of the assessee and direct the learned AO to levy the tax on the interest of income-tax refund at 15% on gross basis. Now coming to the appeal of the revenue challenging the directions of the DRP in respect of interest free foreign bank accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case are that the assessee is a company incorporated under the laws of United Kingdom and is one of the group companies of Rolls Royce Group . The principle activities of the assessee are relating to erection, commissioning, supervision, installation and operations and maintenance of huge power plants and other projects. The style of functioning of the assesssee is typical as it negotiates an agreement and thereafter to execute the same sets project offices. 3. The operations of the assessee in India were carried out through various project offices in India which constitute its PE in India under Article 5 of the DTAA between India and UK. The assessee three project offices in India, namely- (i) Godavari Operation and Mainte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee in respect of the non taxability of interest income of ₹ 10,85,072/- from UK Bank accounts and ₹ 2,88,64,638/- on account of exchange gain arising on the reinstatement of bank balance outside India. However, learned DRP refused to accept the contention of the assessee that the interest is liable to tax at 15% as prescribed under Article 12(6) of the DTAA. According to the learned DRP, the provisions under Article 12(6) of the DTAA shall apply because the assessee undisputedly had a PE in India and debt claim, which is tax refundable, is effectively connected with PE in India. Learned DRP, therefore, took the stand that such an interest on the income-tax refund is taxable in the same manner as business income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia and UK at 15% on gross basis. Learned AR, therefore, submits that the said view may kindly be confirmed in this appeal also. 8. Learned DR placed reliance on the orders of the authorities below. 9. We have gone through the record. The findings of the coordinate bench of this Tribunal in ITA No.801/Del/2014 and the assessment order u/s 143(3)/254 dated 13.9.2018 pursuant to the remand are not in dispute. A careful perusal of the order of the Tribunal and the order giving effect to the directions of the ITAT amply makes it clear that the decision of a coordinate bench of this Tribunal in the case of ACIT, Dehradun vs Clough Engineering Ltd., 130 ITD 137 is applicable to the facts of the case and the interest on income-tax refund ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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