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TMI Blog2005 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... t paid to M/s. Rabobank will constitute income in the hands of the non-resident and whether TDS u/s 195 of the Income Tax Act, 1961 is deductible." 2. The application was admitted vide the Authority's Order dated 10.1.2005 and the case was listed for hearing on 9th February, 2005. The applicant filed a rejoinder on 5.1.2005 and vide its letter dated 31.1.2005 stated that the case may be decided on 9th February, 2005 without the personal presence of the applicant. For the sake of convenience the rejoinder is extracted below:- " This is an admitted fact that M/s. Rabobank is a non-resident having no permanent establishment in India . The Government of India has entered into an agreement with the Government of Singapore for avoidance of dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, the tax liability of the Rabobank (a non-resident) is to be borne by the applicant and payment of interest is to be made net of all taxes. These facts are not in dispute. Reliance is placed on the ruling of the Authority in the case of Hindustan Power Plus Ltd. 267 ITR 685 (2004) by Shri Bhagat. After due consideration, it is seen that reliance is misplaced since in the case of Hindustan Power Plus Ltd., the Authority was requested to determine the tax liability of an employee of M/s. Hindustan Power Plus Ltd., who was a resident of India. Whereas in the present case the applicant has requested the Authority to determine the tax liability of M/s. Rabobank which is admittedly a non-resident. It is, therefore, clear that the Authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany); • 15% of the gross amount of the interest in all other cases. 3. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a contracting State, carries on business in the other Contracting State in which the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement." 5. In this context, it would be useful to notice Article 3(c) which defines the expression "contracting state" and the "other contracting state" which in this case mean India and Singapore respectively. After substituting the meaning of the said expression in para 1 and 2 of Article 11 which may be read as under:- " (1) Interest arising in India and paid to a resident of Singapore may be taxed in Singapore . (2) However, such interest may also be taxed in India in which it arises, and according to the laws of India, but if the beneficial owner of the interest is a resident of Singap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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