Interest on income tax refund is not effectively connected with PE

ACIT (Intl. Taxation) Vs Baker Hughes Singapore Pte. (ITAT Dehradun) Article VII deals with taxation of business profits and also provides for mechanism to compute the profits of the business. Paragraph no. 4 relieves the source State from the rigors of paragraphs nos. (1) and (2) in case the interest is found to be effectively connected with the PE, even if it is not in the nature of business income of the assessee but is effectively connected with the PE. If interest is the business income as a matter of fact, such income falls automatically within the ambit of Article VII without even takin...