Article
‘Interest’ draws interest in tax treaty interpretation
Recently, the European Court of Justice (‘ECJ’), exercising arbitration procedure under Article 273 of the Treaty on the Functioning of the European Union (‘TFEU’) interpreted the term ‘debt-claims with participation in profit’ appearing in Article 11(2) of the Austro-German Double Tax Avoidance Agreement (‘DTAA’). The ECJ, referring to Article 3 (2), observed that while resolving disputes between two States, such a rule of interpretation by a single State at a given point in time is not to be regarded as a rule. The ECJ referring to Article 31(1) of the Vienna Convention on Law of treaties (‘VCLT’) held that a term not defined in any tax treaty must be interpreted according to the methods proper to international law. Should reliance be placed on the general rule of interpretation as per Article 31 (1) of VCLT in every case where a term is not defined in a tax treaty?
Ratio Decidendi
- Issue of existence of an international transaction to be decided by AO before referring the matter to TPO – Calcutta High Court
- DRP has power of enhancement even qua the transactions for which no variation is proposed in the TP order – ITAT, Delhi
- Deduction under Section 80 IA – Assessee cannot opt to not claim depreciation – Supreme Court
- Reduction in limitation period under Section 254(2) not to apply retrospectively – Madhya Pradesh High Court
- Penalty under Section 271G is for an absolute failure to furnish documentation and not for mere delay - ITAT, Hyderabad
- Expense cannot be disallowed under Section 40 (a) (ia) for short deduction of TDS – ITAT, Mumbai
New Nugget
CBDT issues draft rules for Country by Country Reporting (CbCR)
