What the courts have decided on section DTAA art 11, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Sophos Technologies Pvt Ltd v DCIT
ITATHelps taxpayerNo later treatment found
Your APA produced extra income for a year whose advance tax dates passed long ago, and you paid s.234B and s.234C interest on it in the modified return. Can you get it back?
Yes, before this Bench. The Tribunal directed the jurisdictional Assessing Officer to delete the additional s.234B and s.234C interest levied on the income added by the APA and to refund it, and allowed the appeal. It gave that direction in one sentence, as following the precedents placed before it; it did not set out reasoning of its own on the interest question.
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Valeo v ACIT (International Taxation), Chennai
ITATHelps departmentNo later treatment found
My French client offered dividend from its Indian subsidiaries at 5 per cent under the most favoured nation clause and claimed a refund. After the Supreme Court's decision in Nestle SA, what happens to that claim?
It fails. The Chennai Tribunal applied Nestle SA and dismissed the ground, holding that the 5 per cent rate claimed under Article 11(2) of the India-France DTAA read with the Protocol most favoured nation clause, imported from India's treaties with Slovenia, Lithuania and Colombia, could not be given effect without a separate notification under s.90(1). The dividend therefore remains taxable at the treaty rate as notified, and the refund claimed on the 5 per cent basis goes.
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DLJMB Mauritius Investment Company v CIT
Advance RulingHelps taxpayerSuperseded by amendment
We are a Mauritius company set up to channel US money into Indian securities. Are we entitled to the India-Mauritius treaty on our dividends, interest and capital gains?
Yes, in substance. The Authority ruled that DLJMB Mauritius Investment Company was resident in Mauritius within the meaning of article 4 of the India-Mauritius agreement and entitled to the benefits flowing from it, notwithstanding that it had been placed in Mauritius partly for regulatory convenience and partly for the treaty. Capital gains on the transfer of securities, long-term and short-term, were not taxable in India by force of article 13. Income from units of mutual funds fell to the residuary article and was not taxable in India. Interest on approved debt instruments was exempt only so far as Indian law provided. Two questions were withdrawn or not pressed.
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Dr Rajnikant R. Bhatt v CIT
Advance RulingHelps taxpayerSuperseded by amendment
I work in Abu Dhabi but my family, my home and most of my assets are in India. Can I still be treated as a UAE resident under the treaty and get the concessional rates on my Indian dividends, interest and capital gains?
Yes, on these facts. The Authority worked article 4 of the India-UAE agreement in order and found the applicant, a radiologist employed at a government hospital in Abu Dhabi, resident of both States under article 4(1), with a permanent home available in both, and a centre of vital interests that could not be determined because his personal ties were in India and his economic interests were in Abu Dhabi. That took the case to the habitual abode test, which pointed to Abu Dhabi, so he was treated as a resident of the UAE. Dividends from Indian companies, and income from Unit Trust of India units and s.10(23D) mutual funds, were taxable at 15 per cent under article 10; interest at 12.5 per cent under article 11; and capital gains on shares, debentures, units and like securities were exempt in India under article 13. The ruling binds only Dr Bhatt.
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In re Mohsinally Alimohammed Rafik
Advance RulingHelps taxpayerSuperseded by amendment
I am an Indian citizen who has lived in Dubai for years and I hold Indian shares and debentures. Can I claim the India-UAE treaty on my dividends, interest and capital gains?
Yes. The Authority ruled that the applicant, a non-resident who had lived in Dubai for seventeen years, was a resident of the UAE for the India-UAE agreement. Article 4(1) asks whether a person is liable to tax under a State's laws because of a nexus with it, not whether tax is in fact collected; and on the tie-breaker his permanent home, his closer personal and economic relations and his habitual abode were all in Dubai. Gains on his Indian movable property were therefore taxable only in the UAE under article 13(3), dividends capped at 15 per cent under article 10 and interest at 12.5 per cent under article 11. When the assets were acquired made no difference.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
