ITAT rules in favour of HSBC Bank over interest income of Rs 1,498 cr

I-T dept had denied benefits under India-Mauritius tax treaty, said it was established for treaty shopping purpose

The Income-Tax Appellate Tribunal (ITAT) has ruled that Mauritius-based HSBC Bank will not have to pay tax on the interest income of Rs 1,498 crore it earned from India, handing a setback to the income-tax department which wanted the earning taxed.

It said the foreign entity was the beneficial owner of the interest income earned during the assessment year 2015-16.
 

The ruling assumes significance as it sheds light on the issue of beneficial ownership of interest income under the India-Mauritius tax treaty.
 

The Mumbai bench of ITAT, in a July 8 order, said as the taxpayer held a valid banking licence