TMI Blog2020 (3) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... On this aspect itself we uphold the plea of the assessee that assessee is the 'beneficial owner' of the impugned interest income on the strength of the Tax Residency Certificate issued by the Mauritian authorities. - Decided in favour of assessee. - ITA No. 2418/Mum/2018 - - - Dated:- 2-3-2020 - Pramod Kumar (Vice President) And Ram Lal Negi (Judicial Member For the Appellant : V Sreekar. For the Respondent : Niraj Sheth. ORDER Per Pramod Kumar, VP : 1. This appeal is directed against the learned CIT(A) s order dated 24th January 2018 in the matter of assessment under section 143(3) r.w.s 144C of the Income Tax Act, 1961, for the assessment year 2013-14. 2. Grievances of the appellant, in substance, are two fold-first, that the learned CIT(A) was not justified in deleting the addition of ₹ 496,678,73,353 on account of interest income on securities- including T bills ; and second, that the learned CIT(A) erred in remitting the issue of levy of interest under section 234B to the file of the Assessing Officer. 3. As regards the second grievances, it is only fit to be noted and rejected for the simple reason that the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not beneficially owned by the assessee; and, (iii) that the assessee ought to be carrying on bona fide banking business, which it did not. All the aforesaid issues were taken up by the assessee in appeal before the Tribunal, which vide order dated 16.12.2016 (supra) accepted the pleas of the assessee so far as the first two aforestated conditions were concerned. In other words, the Tribunal held that the interest income in question was derived by the assessee and that it was carrying on bona fide banking business. So however, with regard to the third condition of 'beneficial ownership', the Tribunal remanded the issue to the file of the Assessing Officer with certain directions. This aspect was agitated by the assessee by way of a Miscellaneous Application u/s 254(2) of the Act and vide its order dated 10.01.2018 (supra), the Tribunal recalled its decision so far as it pertained to the issue of 'beneficial ownership'. In this background, the learned representative for the assessee pointed out that the captioned proceeding is to adjudicate the issue of 'beneficial ownership' while evaluating assessee's claim of non-taxability of the aforestated interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly held entitled to the benefits of Article 12 of the Double Taxation Avoidance Agreement between India and Netherlands. It was pointed out that assessee had obtained Tax Residency Certificate from the Mauritian Revenue authorities, a copy of which was also filed before the DRP. On the aforesaid basis, assessee sought to explain the fulfilment of the condition of 'beneficial ownership'. The DRP, however, rejected the plea of the assessee as according to it, no documents were placed by the assessee to suggest that the interest income in question was beneficially owned by the assessee. As per the DRP, assessee had failed to show the immediate source of funds for making the impugned investment and also the immediate application of the impugned interest income earned by it. Against such observations of the DRP, assessee is in appeal before us. 5. Before us, the learned representative for the assessee reiterated the reliance on the CBDT Circular no. 789 dated 13.04.2000 (supra) whose validity, according to the learned representative, has also been upheld by the Hon'ble Supreme Court in the case of Union of India v. Azadi BachaoAndolan, [2003] 263 ITR 706/132 Taxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the 'beneficial owner' of the interest income in question also. 7. On the other hand, the ld. DR appearing for the Revenue, has merely reiterated the discussion made by the DRP in its order, which we have already noted in the earlier paras and is not being repeated for the sake of brevity. 8. Article 11(3)(c) of the India-Mauritius Tax Treaty, inter-alia, prescribes that interest income arising in a contracting state shall be exempt from tax in that state provided it is derived and beneficially owned by any bank carrying on a bona fide banking business which is resident of the other contracting state. The limited point before us is as to whether assessee, who is a tax resident of Mauritius, beneficially owns the interest income of ₹ 94,57,45,856/- in question. The other pre-requisites of Article 11(3)(c) of the India-Mauritius Tax Treaty are not for consideration before us as they have already been dealt with by our predecessor Bench in its order dated 16.12.2016 (supra). Be that as it may, in support of the proposition that the impugned interest income is beneficially owned by the it, the appellant has primarily relied on the Tax Residency Certificate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (supra) was held applicable in the context of Royalty income. Thus, in our considered opinion, even in the context of the impugned interest income, Circular no. 789 dated 13.04.2000 (supra) of the CBDT is applicable while applying the provisions of Article 11(3)(c) of the India-Mauritius Tax Treaty. On this aspect itself we uphold the plea of the assessee that assessee is the 'beneficial owner' of the impugned interest income on the strength of the Tax Residency Certificate issued by the Mauritian authorities. 5. Learned representatives fairly agree that the issue in appeal is thus squarely covered, in favour of the assessee, by the aforesaid decision. Learned Departmental Representative, however, rather dutifully relied upon the stand of the Assessing Officer. 6. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches in assessee s own case. Respectfully following the same, and having noted that the learned CIT(A) has merely followed the orders of our coordinate benches, we approve the conclusions arrived at by the learned CIT(A), on this point also, and decline to interfere in the matter. 7. We may, however, has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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