Case Law Details
Koninklijke Philips N.V C/o Deloitte Touché Tohmatsu India Pvt. Ltd. Vs DCIT (ITAT Kolkata)
ITAT Kolkata held that interest on income tax refund is a ‘debt claim’ payable by the Revenue in terms of Article 12(3)(a) of the India-Italy Treaty and thus such interest is not taxable and no TDS ought to be done by the AO.
Facts- Assessee is based out of Netherlands and does not have a permanent establishment (PE) in India. After filing the original return of income on 03.09.2008, it was revised return by reporting total income at Rs.25,40,79,858/- on 29.03.2010. Assessment was completed u/s. 143(3) r.w.s. 144C(13) on 18.10.2012 assessing total income at Rs.162,74,89,392/- wherein additions were made in respect of Management Support Service Agreement (MSSA) and Research and Development Co-operation Agreement (RDCA). The matter travelled in appeal before the Coordinate bench of ITAT, Kolkata in ITA No. 1889/Kol/2012 in respect of these additions which was allowed vide order dated 25.10.2018 by holding the receipts in MSSA and RDCA as not taxable in India.
Subsequently, Ld. AO passed the order giving effect to the order of Coordinate Bench of ITAT, Kolkata (supra) on 23.07.2019 u/s. 143(3) r.w.s. 254 of the Act determining total income at Rs.25,57,77,930/- and refund including interest u/s. 244A(1) payable to the assessee at Rs.25,22,16,230/-. From the order giving effect to the appellate order of ITAT, assessee raised the issue before Ld. CIT(A) in not granting of interest u/s. 244A(1A) of the Act and deduction of tax at source on interest payment u/s. 244A(1) of the Act of Rs.11,50,45,854/-.
Conclusion- Hon’ble High Court of Madras in the case of Ansaldo Energio SPA Vs. CIT (IT) has held that the interest on income tax refund is a ‘debt claim’ payable by the Revenue in terms of Article 12(3)(a) of the India-Italy Treaty and thus such interest is not taxable and no TDS ought to be done by the AO.
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