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TMI Blog2024 (8) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of the financial institutions covered under Article 11(3) of India-China DTAA to include the specified institutions or any other institution wholly owned by the Government of China as may be agreed from time to time between the competent authorities of the Contracting States. Therefore, the specific institutions listed in the protocol for both India and China, were always covered as a government owned financial institution for the purpose of Article 11(3) of India- China DTAA. Article as if stood during the relevant FY was more expansive and after the definition of financial institution wholly owned by the Government in the protocol, wherein China Development Bank is specifically included, it is clear and beyond doubt that China Deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... China Development Bank is a financial institution wholly owned by the Government of China in view of the amended Article 11(3) of India-China DTAA vide Notification No. S.O. 2562(E) [No. 54/2019/F.No. 503/02/2008-FTD-II) dated 17.07.2019 whereby the aforesaid bank has been stated to the included in the list of financial institution wholly owned by the Govt. of China by ignoring the fact that the aforesaid amendment has been made w.e.f. 17.07.2019 which was not applicable during the relevant Financial Year 2015-16. 3. Revenue aggrieved with the order of the ld. CIT(A) holding that China Development Bank is a financial institution wholly owned by the Government of China is eligible for beneficial provision for Article 11(3) of India-China DTA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on investments in domestic and oveneras projects, equity investments, debt investments, fund investmerits, loan investment, and asset management and investments. 7. The National Council for Social Security Fund (NCSSF) is the operation arm of the National Social Security Fund and is also directly under the leadership of the State Council, as well as under the supervision of the State Council or its authorized agencies. 8. The audited financial statements of CDB for the year 2016 clearly states that Central Huijin Investment is a whole owned subsidiary of China Investment Corporation and Buttonwood Investment Holding Company Ltd. is a wholly owned subsidiary of State Administration of Foreign Exchange of China. 9. The relevant portions are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding the provisions of paragraph 2, interest arising in a Contracting State and derived by the Government of the other Contracting State, a political sub-division, a local authority and the Central Bank thereof or any financial institution wholly owned by that Government, or by any other resident of that other Contracting State with respect to debt claims indirectly financed by the Government of that other Contracting State, a political sub- division, a local authority, and the Central Bank thereof or any financial institution wholly owned by that Government shall be exempt from tax in the first-mentioned Contracting State. . 12. Accordingly, in terms of para 3 of Article 11 of India-China tax DTAA as it stood during the relevant FY, any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India-China DTAA, paragraph 3 was simultaneously inserted by deleting the erstwhile paragraph 3 vide the same notification itself i.e. Notification No. 10. 2562(E)(No.54/2019/F.No. 503/02/2008FTD-II). Dated 17-7-2019, which defined the term 'Central bank' and 'Any financial institution wholly owned by the Government of the other Contracting State' as under: .. 3. For the purpose of paragraph 3 of Article 11 (Interest): (a) the term Central Bank means, in the case of China, the People's Bank of China, and in the case of India, the Reserve Bank of India (b) the term 'any financial institution wholly owned by the Government of the other Contracting State means: (i) in the case of China: (A) the China Development Bank: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India- China DTAA. The Article as if stood during the relevant FY was more expansive and after the definition of financial institution wholly owned by the Government in the protocol, wherein China Development Bank is specifically included, it is clear and beyond doubt that China Development Bank is and has always been a financial institution wholly owned by the Government and hence, eligible for the benefit for the provisions of Article 11(3) of India-China DTAA and therefore, the appellant cannot be treated assessee in default with respect to non-deduction of tax u/s 195 of the Act on interest payments made to China Development Bank. 18. The decision of the ld. CIT(A) is hereby affirmed. 19. In the result, the appeal of the Revenue is di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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