2012 (3) TMI 46

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ith Ericsson India (P) Ltd and Ericsson AB for procuring cellular telecommunication equipments, software, service and documentation. To facilitate the financing for such procurements, the applicant availed of a loan facility for $ 300 million from ABN Amro Bank NV Stockholm Branch and NORDEA Bank AB Sweden under a facility agreement dated 30.12.2009. That agreement was amended and restated on 28.1.2010.   2. The loan under the facility agreement was guaranteed by the Swedish Export Credits Guarantee Board (EKN)to the extent of 95% in respect of risk arising due to political and commercial events. The guarantee is provided in respect of the actual amount drawn down by the applicant from time to time. On 10.12.2010, the Royal Bank of Sc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s per Article 11(3) of the Double Taxation Avoidance Agreement between India and Sweden ('India-Sweden tax treaty')? 2. If the answer to the question (1) is in the negative then what percentage of interest would be chargeable to tax in India? 3. In view of the facts stated in Annexure III, and also in the light of the declaration provided by SEK that it does not have a Permanent Establishment in India in terms of Article 5 of the India - Sweden tax treaty, whether the interest to be paid by the Applicant to SEK will be chargeable to tax in India as business profits under Article 7 of the India-Sweden tax treaty and would be subject to deduction of taxes at source under section 195 of the Act? 5. It is the case of the applicant that the loa .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ven a loan or credit guaranteed by EKN would come within the purview of the exemption contained in paragraph 3 of Article 11 of the Convention. We have upheld such plea in our Ruling in AAR No.953 of 2010 referred to earlier. Again, it does not appear to be necessary to repeat the reasons for that conclusion. Suffice it to say, that we adopt that part of the reasoning in the Ruling in AAR No.953 of 2010 also. In the light of what is stated above, we rule on question No.1 that the payment of interest by the applicant to SEK through NORDEA Bank AB is not taxable in India under Article 11.3 of the India-Sweden Double Taxation Avoidance Convention in view of and only in view of the Most Favoured Nation Clause in the India-Sweden Protocol which .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X