Interest paid by PE of foreign bank to H.O. deductible in hands of PE, But same interest taxable in hands of H.O.

Although interest paid to the head office of the assessee bank by its Indian branch which constitutes its PE in India is not deductible as expenditure under the domestic law being payment to self, the same is deductible while determining the profit attributable to the PE which is taxable in India as per the provisions of article 7(2) & 7(3) of the Indo¬Japanese treaty read with paragraph 8 of the protocol which are more beneficial to the assessee.

The said interest, however, cannot be taxed in India in the hands of assess

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