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The controversial double tax avoidance treaty between India and Mauritius is likely to survive despite pressure from the income-tax authorities. The pact may be reworked, but not scrapped, thanks to the lobbying by a high-level delegation headed by Mauritius Prime Minister Navinchandra Ramgoolam.
The Tribunal observed that the loss incurred by the assessee is on account of the loan advances to BFL from which the assessee company had earned interest. It was the surplus fund of the assessee which was utilized for advancing loan with the intention of earning interest, but assessee is not a money lender. It is common in the commercial practice that if surplus money is available then the business invests the same for earning interest instead of keeping it idle. The said investment would be capital in nature as surplus funds are invested with a view to earn interest. The assessee is also not a dealer in securities and investments. ‘ A So the loss sustained by the assessee in respect of the loan advanced to BFL is in the nature of capital loss and is not allowable u/s.28 of the Act also.
THE New Year has just set in, and things have started going awry for the CBDT. In fact the CBDT’s ‘time chakra’ had entered the adversarial zone some time late last year when the Delhi High Court had begun to take note of its frivolous appeals. It did warn the income tax authorities and also asked for detailed procedure and screening methodoligies adopted by the Board before an appeal is filed before the High Courts.
