Interest on NOSTRO Account Not Taxable as Receipt from Self

The Mumbai Bench of the Income Tax Appellate Tribunal held that interest received by an Indian permanent establishment (PE) from its overseas head office and foreign branches is not taxable under the domestic law, as the transactions represent dealings with oneself and are governed by the principle that no person can make profit out of itself. 

Correspondingly, interest paid by the Indian branch to the head office and overseas branches cannot be claimed as a deductible expenditure. The Tribunal followed the settled judicial position laid down by the Special Bench and affirmed by the Bombay High Court.