TMI Blog2021 (10) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No.: 1796/Mum/2020 - - - Dated:- 29-9-2021 - Pramod Kumar, Vice President, And Ravish Sood Judicial Member For the Appellant : Deepkant Prasad For the Respondent : Niraj Sheth ORDER PER PRAMOD KUMAR, VP: 1. This appeal is directed against the learned CIT(A) s order dated 07th February 2020 in the matter of assessment under section 143(3) r.w.s. 144C of the Income Tax Act, 1961, for the assessment year 2016-17. 2. Grievances raised by the Assessing Officer are as follows:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in directing the Assessing Officer to follow the decision of Hon'ble ITAT on Interest income from foreign currency loan and Securities, ignoring the fact that, the assessee has not even furnished the financials e.g. Annual reports etc. during the course of assessment proceedings and has failed to prove the beneficial ownership of funds which is one of the prerequisite to claim exemption under Article 11(3)(c) of India-Mauritius DTAA . 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in directing the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the Tax Residency Certificate to prove its beneficially ownership? 3. When this appeal came up for hearing on first date of hearing learned Departmental Representative submitted that the matter pertains to treaty interpretation issue and therefore we heard in the I Bench. To this, learned counsel reply was that undoubtedly the appeal involve in treaty interpretation issue but as the issue in appeal is squarely covered by series of decisions of the co-ordinate benches, transferring the matter to I Bench will only delay the disposal. He further submitted that since one of us, presiding over this bench, is also the jurisdictional of Vice President, such a technicality may not be allowed to come in a way of disposal of admittedly covered matters. 4. As learned representatives fairly agree, the issues raised in this appeal are covered in favour of the assessee, by the decision of coordinate bench dated 2nd March 2020, in assessee own case for the assessment year 2013-14, wherein the coordinate bench has inter alia observed as follows:- 4. Coming to the main grievance raised in this appeal, we find this issue is also covered in favour of the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 interest income in terms of Article 11(3)(c) of the India-Mauritius Tax Treaty. Insofar as the scope of the present proceeding is concerned, the ld. DR appearing for the Revenue did not dispute the assertions of the assessee and, in fact, our attention was also invited to two Affidavits filed by the Assessing Officer dated 21.03.2018 and 15.03.2018 before the Hon'ble Bombay High Court wherein the Revenue took the stand that the order passed by the Tribunal dated 16.12.2016 (supra) was recal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Taxman 373. Furthermore, it is pointed out that the Ministry of Finance vide Press Clarification dated 01.03.2013 clarified that the CBDT Circular no. 789 dated 13.04.2000 (supra) continues to be in force. Another aspect which is brought out by the learned representative is based on the decision of Chennai Bench of the Tribunal in the case of Hyundai Motor India Ltd. v. Dy. CIT [2017] 81 taxmann.com 5. In this case, the interest paid by Hyundai Motor India Ltd. to the assessee was disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 issued by the Mauritian Revenue authorities certifying the fact that assessee is a tax resident of Mauritius. Copies of such Certificates have been placed in the Paper Book at pages 268 to 270. Factually speaking, there is no dispute on this aspect. The only controversy is whether such Tax Residency Certificate enables an inference that the interest income in question is beneficially owned by the assessee. In this context, the CBDT Circular no. 789 dated 13.04.2000 (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, hasten to add that this decision is not an authority on the connotations of beneficial ownership in general, and is anyway confined to the specific situation of India Mauritius DTAA, and thus on peculiar facts of this case. 8. No other issue was raised, or pressed, before us. 5. In view of above discussion we did put it to the learned Departmental Representative that he may peruse the filed papers and consult the regular Ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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