TaxTMI 
TaxTMI 
1989 (12) TMI 81
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....en an incorrect application of Article 12(2) of the D.T.A. Convention resulting in a total undercharge of tax of Rs. 37,690. In that view he started proceedings under section 263 by issue of notice dated 23-2-1988. The assessee's counsel appeared before the Commissioner and filed written submissions. It had been stated therein that the rate of tax at 15% was correctly applied by the ITO on interest on short-term deposits with Banks and the Housing Development Finance Corporation and that the said interest satisfied the conditions necessary for applying Article 12(2) of the Convention for Avoidance of Double Taxation between India and the United Kingdom. The Commissioner after referring to Article 12(2) held as under : " It is seen from r....
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....er dated 12-8-1987 from Grindlays Bank P.L.C. to the Consolidated Tea & Lands Co. (India) Ltd. (a company under the group of James Finlay), copy of the Certificate of Deposit issued by Housing Development Finance Corporation Ltd. He also filed copy of letter dated 11-4-1985 addressed by the assessee to the ITO, A-Ward, Foreign Companies Circle-I, Calcutta and also letter dated 15-6-1983 from Tata Tea Ltd. addressed to the Commissioner of Income-tax, West Bengal-V, Calcutta and copy of letter dated 27-1-1984 addressed by James Finlay P.I.C. to the CIT, West Bengal-V, Calcutta. The arguments of the assessee's counsel were to the following effect : The assessee is a non-resident company. The assessee derived interest of Rs. 68,375 from short-t....
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....unless an application in the prescribed form is submitted. The terms and conditions of the Deposit Scheme with HDFC are given at pages 7 & 8 of the paper book. In it also the same condition appears that for renewal a fresh prescribed form of application has to be submitted. Thus, whenever a renewal is made it amounts to a fresh deposit. On the commentary contained at page 1014 to section 370 of the Companies Act, 1956 by A. Ramaiya, 11th edition, it is mentioned that renewal of deposits after the expiry of the term will be deemed to be fresh deposit. The photostat copy of page 1014 from the said book is given at page 10 of the paper book. Further, the Commissioner has authorised the assessee to receive in India interest on deposit made with....
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....Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may also be taxed in the Contracting State in which it arises and according to the law of that State, provided that where the resident of the other Contracting State is the beneficial owner of the interest and it is paid in respect of a loan or debt first created after the date of entry into force of this Convention, the tax so charged shall not exceed 15 per cent of the gross amount of the interest. " Clause (2) of Article 12 speaks of charging of interest at a rate not exceeding 15% in respect of interest paid in respect of a loan or debt first created after the date of entry into ....