Royal Bank of Scotland Vs Director of Income Tax (International Taxation) (Calcutta High Court)
Foreign Bank Cannot Claim Domestic Tax Rate or Interest Deduction Without TDS, but ATM Is a Computer: Calcutta HC
Multiple International Tax Issues Before the High Court
In The Royal Bank of Scotland N.V. v. Director of Income Tax (International Taxation), Kolkata, ITA No. 699 of 2007, judgment dated 22.09.2026, the Calcutta High Court decided important questions concerning the tax rate applicable to a foreign bank, deductibility of interest paid by its Indian permanent establishment to the overseas head office, taxability of interest received from foreign branches and the depreciation rate applicable to Automated Teller Machines.
The assessee, formerly known as ABN Amro Bank N.V., was a foreign company incorporated in the Netherlands. It carried on banking operations in India through a branch constituting a Permanent Establishment under the India-Netherlands DTAA. The dispute related to AY 2003-04.
The assessee contended that its Indian branch should be taxed at the rate applicable to domestic companies by applying the non-discrimination clause contained in Article 24(2) of the DTAA. It also claimed deduction of interest paid by the Indian branch to its overseas head office and other foreign branches. Further, it sought exclusion of interest received by the Indian branch from the head office and claimed higher depreciation on ATMs by treating them as computers.
