Article 24 of India-Denmark DTAA – Limitation of deduction under Section 94B of Income-tax Act, 1961, in respect of interest paid to non-resident AEs is discriminatory in terms of Article 24 of India-Denmark DTAA

5. [2026] 184 taxmann.com 579 (Chennai - Trib.)

Vestas Wind Technology India (P.) Ltd vs. ITO (Corporate Circle)

IT APPEAL NO. 320 (CHNY) OF 2025

A.Y.: 2018-19 Dated: 09 March 2026

Article 24 of India-Denmark DTAA – Limitation of deduction under Section 94B of Income-tax Act, 1961, in respect of interest paid to non-resident AEs is discriminatory in terms of Article 24 of India-Denmark DTAA

FACTS

The Assessee, an Indian company, was engaged in the business of manufacturing wind turbine generators. The Assessee was ultimate subsidiary of Vestas Wind Systems A/s (“Vestas Denmark”). The Assessee had obtained external commercial borrowings (“ECB”) from Vestas Denmark. The rate of interest on ECB was at arm’s length and in accordance with the bilateral advance pricing arrangement (“BAPA”). In return of its income, the assessee suo moto disallowed interest of INR 9.34 Crores under Section 94B of Act. The TPO recomputed disallowance under Section 94B of the Act as INR 18.47 Crores. The CIT(A) upheld the assessment order.

Aggrieved with the final order, the department preferred appe