Assessee, a tax resident of United Kingdom, is  engaged in manufacture of specialty chemicals. During relevant year, assessee had extended guarantees to various overseas branches of foreign banks on a global basis in relation to credit facilities extended by those financial institutions to its Indian subsidiaries. In its return of income, it had characterized amount of guarantee fee as interest and, thus, taxable under article 12. Assessing Officer held that said sum would be liable to be taxed under Article 23(3) being in nature of other income. Tribunal held that  guarantee charges were not received by assessee in respect of any debt owed to it by its Indian subsidiary and guarantee charges were levied for service of providing parent company guarantees and counter indemnification of liabilities of Indian subsidiaries. Therefore  on facts, guarantee charges could not be viewed as ‘interest’ under Article 12. Further since guarantee charges became leviable every quarter at a rate already agreed upon by parties and on outstanding balance, guarantee charges clearly answered to description of income accruing or arising in India. Tribunal  affirmed  the order of Tribunal. Appeal of the assesseee is dismissed. (AY. 2011-12)