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of <h1>Interest taxable on paid basis under Articles 11(1),11(2) of Indo-Cyprus DTAA; Chapter X anti-abuse and Article 9 apply; appeal refused</h1> <h3>THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -3 Versus TMW ASPF I CYPRUS HOLDING COMPANY LTD.</h3> HC held that interest income is taxable on a paid basis under Articles 11(1) and 11(2) of the Indo-Cyprus DTAA, and that the anti-abuse provisions of ... Interest income is chargeable to tax only on paid basis - Article 11(1) and 11(2) of Indo-Cyprus DTAA - Anti-abuse provision of Chapter X of Income Tax Act relating to transfer pricing duly recognized under Article 9 of the Indo-Cyprus DTAA applied - HELD THAT:- A perusal of the paper book reveals that a request for waiver of interest was made by the investee company which was accepted by the assessee. Finding of the ITAT held it cannot be the case of accrual of interest also, because none of the investee companies have acknowledge that any interest payment is due, albeit they have been requesting for waiving of interest of even coupon rate of 4%, leave alone the return of 18% which was dependent upon some future contingencies. Assessee despite all its efforts has acceded to such request This Court is of the view that no substantial question of law arises for consideration in the present appeal. Delay in refiling the appeal was condoned (CM APPL. 30024/2022). Appeal ITA 192/2022 challenged the ITAT order dated 9 August 2019 in ITA No. 879/Del/2016 for AY 2011-12, contending that Article 11(1) and 11(2) of the Indo-Cyprus DTAA renders interest income taxable only on a paid basis and that the anti-abuse/transfer pricing provisions of Chapter X (recognized under Article 9 of the DTAA) nonetheless applied. The High Court noted the paper book showed the investee companies had requested waiver of interest and that the assessee had accepted those requests. The court reproduced the ITAT's factual finding: '........Here it cannot be the case of accrual of interest also, because none of the investee companies have acknowledge that any interest payment is due, albeit they have been requesting for waiving of interest of even coupon rate of 4%, leave alone the return of 18% which was dependent upon some future contingencies. Assessee despite all its efforts has acceded to such request.' In view of that finding, the court held no substantial question of law arose and dismissed the appeal.
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