Double taxation - clarification

[Rajagopal Ramachandran]

I have come across some Tax Assessing Officers who is requesting assesse to produce case laws on Double Taxation Treaty Signed between UAE and India. Article 11 of the Income Tax Act clearly mention the Tax on Interest paid to a NRI living in UAE for more than 180 days and the rate of tax is fixed at 12.5% on interest paid to NRO Savings and or FD account. Even circulars been issued to Bank to deduct TDS at 12.5% for such case. Can anyone help me in giving some case on laws in this case on DTAA to produce to the officer. Thanks Ramachandran

[Dinesh Gupta]

I think, when the provisions of treaty and law is clear, there is no need to take any help from a case law. Inspite of that, there may various cases or advance rulings that may address the same or similar issue but AO may not accept a case which is not on the same line.

[Rajagopal Ramachandran]

Respected Dinish Ji, Can you help me in getting some Advance Rulings on this issue. I am confused why AO has to request at the first instance to produce similar case laws and rulings when the Act clearly says. All proofs given relating to residence status as per passport copies of In and Out of India as per immigration stamps. But AO insists on case rulings as sample to pass the assessment. If I dont produce any case rulings then it will assessed at regular tax rate. Dont understand. Dinish Ji can you give me some case law rulings.Help appreciated.

[Surender Gupta]

I found a ruling by the AAR on the issue pertaining to article 11 of the DTAA with UAE. I hope this case may help you to get the right answer. You can visit this ruling by visiting the following link: https://www.taxtmi.com/caselaws?id=6583

[Rajagopal Ramachandran]

GuptaJi, Thank you verymuch and let me go through the AAR.

AI Summary

Tax on interest: treaty rate applies to NRIs resident in partner state; rely on AAR guidance to claim reduced TDS. Article 11 treaty relief for interest payments is asserted as the basis for a reduced TDS rate on interest paid to NRIs resident in the UAE; despite documentary proof of residence, an assessing officer has requested supporting case law or advance rulings before accepting treaty treatment. A forum respondent points to an Advance Ruling on the India-UAE DTAA addressing Article 11 and supplies a link as potential support for claiming the treaty rate rather than regular taxation.