TaxTMI 
TaxTMI 
2024 (8) TMI 1043
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....tances of the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee by holding that interest payment made to China Development Bank (CDB) is exempt from taxation under Article 11(3) of India China DTAA by observing that China Development bank is a financial institution wholly owned by the Government of China without appreciating the fact that as per the Financial Statement of China Development Bank only 36.45% shares in the said Bank is held by the Government of China (Ministry of Finance) during the relevant period i.e. FY 2015-16. 2) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that China Development Bank is a financial institution wholly owned by the Government of China ....
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....Central Hujin Investment (Hujin) is a wholly stateowned limited liability company Incorporated in accordance with the Company law of the People's Republic of China. As authorized by the State Council. It represents the government as an investor in key state- owned financial institution, and in compliance with applicable laws and regulations, helps preserve and increase the value of state-owned financial assets 6. Buttonwood Investment Holding Company (BH) is a limited liability company incorporated in accordance with the Company law of the People's Republic of China. It is solely funded by The State Administration of Foreign Exchange, and mainly focuses on investments in domestic and oveneras projects, equity investments, debt in....
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.... Security Fund, the bye laws of National Council for Social Security Fund clearly provides that the same is a public institution directly under the state council and accordingly, wholly owned by the Government of China. 11. Even the Protocol to India-China DTAA inserted vide Notification No. S.O. 2562(E) [No.54/2019/F.No. 503/02/2008FTD-II], Dated 17-7-2019, specifically provides that CDB is a financial institution wholly owned by the Government of China. It is noteworthy that Article 11(3) of India-China DTAA was amended vide Notification No. S.O. 2562/E) [No.54/2019/F.No: 503/02/2008-FTD-II] dated 17-7-2019 and prior to such amendment. Article 11(3) of India-China DTAA stated as under: "3. Notwithstanding the provisions of par....
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....aid to the Government, a political subdivision or a local authority, the Central Bank or any financial institution wholly owned by the Government of the other Contracting State, or paid on loans guaranteed or insured by the Government, a political subdivision or a local authority, the Central Bank or any financial institution wholly owned by the Government of the other Contracting State, shall be exempt from fax in the first-mentioned State." 14. Accordingly, in view of the above, both erstwhile Article 11(3) and amended Article 11(3) of the Indian-China DTAA provides that interest arising India and derived/paid to any financial institution wholly owned by the Government of China is exempt from tax on the interest earned. 15. Further,....
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....itution wholly owned by Government of China. Paragraph 3 of the Protocol as reproduced above uses the word "means" and not 'includes' or 'deemed to be included" which suggests that CDB is and has always been a financial institution wholly owned by the Government. Also, with the inclusion of the above definition and for the purpose of defining the term financial institution wholly owned by the Government, the protocol restricted the scope of the financial institutions covered under Article 11(3) of India-China DTAA to include the specified institutions or any other institution wholly owned by the Government of China as may be agreed from time to time between the competent authorities of the Contracting States. 17. Therefore, t....