Indian decision that income arising from dealings with an Indian branch is taxable

The Indian Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 20 October 2006 in the case of Dresdner Bank AG v. Additional Commissioner of Income Tax ([2007] 11 SOT 158 (MUM.)) on whether interest receivable by the Indian Branch of a bank from its head office/overseas branches was an "income" for tax purposes and accordingly, whether such income was taxable in India under the India-Germany tax treaty (the Tax Treaty).

(a) Facts. The taxpayer (i.…