Guarantee Commission Charges taxable in India as “other income” under Article 23(3) of Indo-UK DTAA

Johnson Matthey Public Limited Company Vs CIT (Delhi High Court)

Conclusion: Guarantee commission charges received by a foreign parent company from its Indian subsidiaries were taxable in India, not as interest but as “other income” under Article 23(3) of the DTAA. Additionally, the court’s ruling underscored that the location of the economic activity, rather than the contractual formalities, determined the taxability of income.

Held: The issue arose out of the receipt of guarantee charges by the appellant from its Indian

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