CBDT Instruction On Claim Of DTAA Benefits By FIIs

The CBDT has issued an Instruction dated 24th April 2015 stating that several Foreign Institutional Investors receiving income from transactions in securities claim such income as exempt from tax under the Income-tax Act, 1961(‘the Act’) by availing benefit provided in the Double Taxation Avoidance Agreements (‘DTAAs’) signed between India and their respective countries of residence. The CBDT has directed that since the issue involved in such cases is limited, such claims should be decided expeditiously. It has directed that in all cases of Foreign Institutional Investors seeking treaty benefits under the provisions of respective DTAAs, decision may be taken on such claims within one month from the date such claim is filed.


It has come to the notice of the Board that several Foreign Institutional Investors receiving income from transactions in securities claim such income as exempt from tax under the Income-tax Act, 1961(‘the Act’) by availing benefit provided in the Double Taxation Avoidance Agreements (‘DTAAs’) signed between India and their respective countries of residence.

2. Since the issue involved in such cases is limited, such claims should be decided expeditiously. Accordingly, it has been decided that in all cases of Foreign Institutional Investors seeking treaty benefits under the provisions of respective DTAAs, decision may be taken on such claims within one month from the date such claim is filed.

3. This may be brought to the notice of all concerned for strict compliance.


3 comments on “CBDT Instruction On Claim Of DTAA Benefits By FIIs
  1. vswami says:

    To cut the long story short:

    As a renowned law legend quipped remorsefully, – most controversies and court litigation is ‘lawyer stimulated’. May be, this particular one is to be traced to ‘judicial pro-activism’.
    Read:
    http://www.thehindu.com/opinion/lead/disturbing-trends-in-judicial-activism/article3731471.ece

    Going by wisdom still in the process of being gathered in hindsight, may be, anyone, let alone the FIIs, not barring the FM, has been left wondering why at all the tribunal happened to not follow the Ruling in Timken case, but unwittingly chose to go by its own line of reasoning, seemingly convoluted by any logic; thereby, to muddle the regime , to the chagrin / discomfort of the Revenue itself.

  2. vswami says:

    OFFHAND
    As understood by one, the cited instruction has come to being issued, presumably to set at rest the controversy given rise to by the AAR Ruling in ‘Castleton’ case (Castleton Investment Limited – Authority for Advance Rulings). Such a controversy would seemingly not have arisen at all had the tribunal simply followed the earlier Ruling in ‘Timken’ case(itatonline.org » In Re The Timken Company (AAR)» Latest …).

    In Timken case, one of the points raised by applicant is whether on the given facts and circumstances a tax return has to be filed under sec. 139. The view the tribunal has taken is to the effect that, -it has to.

    Nonetheless, on another closely related point raised is wrt TDS obligation under sec 195. And , the tribunal has held thus:

    It has now been held in GE Technology Centre P. Ltd. v. CIT [327 ITR 456(SC)] by the Supreme Court that in cases where there is no changeability to tax under the provisions of the Act, expressions used in the section itself (unlike section 92) there will be no obligation to withhold. Respectfully following that decision I rule that there is no obligation on the applicant to withhold tax in this case.

    If viewed on the flip side, that means the need to make a formal claim that there is no TDS obligation does not arise. As a corollary, therefore, there must also be no need to file a tax return. If so conceded, it will be in the fitness of things for the CBDT to set at rest the contra view the tribunal has taken on the said point as well.

  3. seem the circular is in the right direction

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