INCOME TAX ACT, 1961

Section 4 Article 11(3)(c)

Income - Chargeability - Interest earned on foreign currency loan given to Indian corporates and on debt securities - Assessee, a beneficial owner of interest

Assessee, as stated by the AO, was a Limited Liability Company incorporated and registered in Mauritius. The assessee was a Foreign Industrial Investor (FII) duly approved by the Securities Exchange Board of India (SEBI). In the course of assessment proceedings, the AO noticing that the assessee had earned interest on debt securities and foreign currency loans to India Corporate, called upon the assessee to explain why such income had not been offered to tax in India. In response, it was submitted by the assessee that it being a tax resident of Mauritius is governed by India-Mauritius Double Taxation Avoidance Agreement. It was submitted, the assessee being a tax resident of Mauritius and carrying on bona fide banking business, the interest income in India will not be taxable in terms of Article-11(3)(c) of the tax treaty, as the assessee was a beneficial owner. AO, however, did not find merit in the submissions of the assessee and brought the interest income to tax. CIT(A), however, relying upon his decision in assessee's own case for the assessment year 2010-11, upheld the decision of the AO. Held: Following the decisions of the Tribunal in assessee's own case, the interest income earned by the assessee was not taxable in India as the assessee was a beneficial owner as per article 11(3)(c) of the India-Mauritius Tax Treaty.

Followed:assessment year 29011-12 Tribunal in ITA No. 1708/Mum/2016, dt. 2-7-2018 and Assessee's own case in the assessment year 2013-14 vide ITA No. 2213/Mum./2018, dt. 2-1-2019, and in assessment years 2009-10 and 2010-11, vide ITA No. 1087/Mum./2018 and others, dated 30-8-2018.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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