India: Interest on tax refunds; aircraft landing rights; withholding tax

India: Tax refunds; aircraft; withholding tax

The KPMG member firm in India has prepared reports concerning the following judicial developments (read more at the hyperlinks provided below):

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Interest on tax refund is taxable as “business income” under the India-UK tax treaty; effectively connected with a PE in India: The Uttarakhand High Court held that the interest paid on an income tax refund is taxable as "business income” under provisions of the India-United Kingdom income tax treaty because the debt-claim, for which the interest was paid, was effectively connected with a permanent establishment in India. The case is: B.J. Services Company Middle East Ltd.

Read an August 2015 report [PDF 454 KB]

 

Landing and parking charges incurred by international airlines not “rent” for purposes of withholding tax at source: The Supreme Court of India held that amounts paid for landing and parking aircraft, by international airlines, is not to be treated as “rent” within the meaning of section 194-I of the Income-tax Act, 1961 because the amounts paid by the airlines are not for “use of land” but are instead for the use of various other facilities and services. The case is: Japan Airlines Co. Ltd.

Read an August 2015 report [PDF 404 KB]

 

Tax withheld under wrong provision, disallowed: The Kerala High Court held that if tax is to be withheld (or “deducted” as referred to in India) under section 194J but is actually withheld under section 194C, disallowance provisions of section 40(a)(ia) still apply.The case is: P V S Memorial Hospital Ltd.

Read an August 2015 report [PDF 398 KB]

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