Beneficial ownership of interest income under the India-Mauritius treaty extended to treaty exemption on Mauritius residency proof.

A Mauritius tax resident relying on its Tax Residency Certificate and CBDT Circular No. 789 claimed treaty relief on interest income under Article 11(3)(c) of the India-Mauritius DTAA. The Tribunal reasoned that the circular is not limited to dividend or capital gains income and can also apply to interest income, and that judicial precedent supported this reading. As the Revenue produced no material to rebut the position arising from the residency certificate, the assessee was treated as the beneficial owner of the interest income and the income was held not taxable in India under the treaty.

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Issues: Whether the assessee was the beneficial owner of the interest income for purposes of Article 11(3)(c) of the India-Mauritius Double Tax Avoidance Convention and was therefore entitled to treaty exemption.

Analysis: The assessee, a tax resident of Mauritius, relied on its Tax Residency Certificate and on CBDT Circular No. 789 dated 13.04.2000, which states that a Mauritian residence certificate is sufficient evidence of residence as well as beneficial ownership for applying the treaty. The Tribunal held that this circular was not confined to dividend or capital gains income and could equally apply to interest income under Article 11(3)(c). It further noted that the principle had support from judicial precedent and that the Revenue had not shown any material to displace the position arising from the residency certificate.

Conclusion: The assessee was held to be the beneficial owner of the interest income and the income was held not taxable in India under Article 11(3)(c).

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