Mauritian tax residency certificate established beneficial ownership for treaty relief on interest income under India-Mauritius DTAA

A valid Mauritian Tax Residency Certificate, read with CBDT Circular No. 789, was treated as sufficient evidence of residence and beneficial ownership for treaty benefits under the India-Mauritius DTAA. The Tribunal held that this clarification was not limited to dividend or capital gains income and also applied to interest income under Article 11(3)(c). Relying on the assessee's own earlier cases and finding no contrary material, it accepted treaty protection for the interest earned from debt securities and upheld the CIT(A)'s relief, with the Revenue's challenge failing.

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Issues: Whether the assessee was the beneficial owner of the interest income and entitled to exemption under Article 11(3)(c) of the India-Mauritius DTAA, and whether the CBDT circular on Mauritian residence certificates applied to such interest income.

Analysis: The assessee was a tax resident of Mauritius and relied on its Tax Residency Certificate to claim treaty protection for interest income earned from debt securities. The CBDT Circular No. 789 dated 13.04.2000 stated that a Mauritian residence certificate constitutes sufficient evidence of residence as well as beneficial ownership for applying the treaty. The coordinate bench further held that this clarification was not confined only to dividend or capital gains income, and that the same principle applied to interest income under Article 11(3)(c). Following the earlier decisions in the assessee's own case, the Tribunal found no reason to take a different view and approved the CIT(A)'s conclusion.

Conclusion: The assessee was held to be the beneficial owner of the impugned interest income and entitled to treaty protection under Article 11(3)(c); the Revenue's appeal failed.

Final Conclusion: The assessment was sustained and the challenge to the CIT(A)'s relief was rejected.

Ratio Decidendi: Under the India-Mauritius DTAA, a valid Mauritian Tax Residency Certificate, read with CBDT Circular No. 789, is sufficient to establish beneficial ownership for treaty benefits in the absence of contrary material.

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