9911796707
TMI Blog2024 (1) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... the draft assessment order passed u/s 144C (1) r/w Section 143(3) of the Act, the AO while granting exemption to the interest on ECB has accepted that assessee is carrying on bona fide banking business in Mauritius. So also in the final assessment order - The fact that assessee is carrying on a bona fide banking business in Mauritius is not disputed. Article 11(3) of the DTAA interest arising in a contracting state (in this Case India) shall be exempt from tax in that State (in India) provided it (the Income) is derived and beneficially owned by any bank carrying on a bona fide banking business which is a resident of the other contracting State (Mauritius). Therefore, so long as assessee is carrying on bona fide banking business in Mauritiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 11(3) of the Indo-Mauritius Double Taxation Avoidance Agreement ( DTAA ). The AO did not accept assessee's claim that the interest income from securities in India was exempt from tax in India as per clause (c) of Article 11(3) of the DTAA. The AO, however, had accepted that assessee's income from External Commercial Borrowings ( ECB ) was exempt under Section 90 of the Act read with Article 11 of the DTAA as the company was carrying on bona fide banking business in Mauritius. 3. Against the order disallowing the interest income from securities in India, assessee filed objections with the Dispute Resolution Panel ( DRP ) under Section 144C of the Act. The DRP upheld the findings of the AO based on which the AO passed the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in India, the assessee is involved in only FII activity and no banking license has been granted by the RBI to the assessee for banking activities in India? (d) Without prejudice to the above, whether on the facts and the circumstances of the case and in law, Hon'ble Tribunal has erred in holding assessee is entitled to the benefit of Article 11(3)(c) of the India Mauritius Treaty, whereas, the interest income derived by assessee in India not derived from its banking activity in India? (e) Whether on the facts and the circumstances of the case and in law, Hon'ble ITAT has erred in holding that assessee has interest income derived from bonafide banking activity ignoring the fact that assessee is not involved in any banking activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by: (a) the Government or a local authority of the other Contracting State; (b) any agency or entity created or organised by the Government of the other Contracting State; or (c) any bank carrying on a bona fide banking business which is a resident of the other Contracting State. Under the said Article, therefore, interest arising in a contracting state (in this Case India) shall be exempt from tax in that State (in India) provided it (the Income) is derived and beneficially owned by any bank carrying on a bona fide banking business which is a resident of the other contracting State (Mauritius). Therefore, so long as assessee is carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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