Re: Interest income Foreign source .

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the Tribunal for A.Y. 2013-14 by the Income tax Department in respect of the relief given in appeal by the Commissioner(Appeals) against addition made to the total income by the AO on the ground that the assessee had interest income from foreign sources as was informed by a foreign Government to the Government of India under the Exchange Information Agreement between the two Governments. The authorities have rejected the declaration by invoking the provisions of clause(iv) of sub-section(a) of s.9 .

Clause(iv) of s.9(a) prohibits an assessee to file a declaration for settlement of a dispute in relation to an assessment made on the basis of information received form a foreign government as per the agreement made u/s 90 and 90A of the Act. Admittedly, the addition was made on the basis of the information received form a foreign government and therefore the assessee would not be entitled to file a declaration under the scheme leading to a withdrawal of appeal by the Income tax Department on payment of 50% of the disputed tax.  The Government has not much to loose to permit the settlement of a case which it has already lost and in the process be enriched. 

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