Law:

Section:

To claim tax exemption under section 10(15), applicant must have in its possession, either approval granted by ECB Divi- sion, Department of Economic Affairs, Ministry of Finance on basis of which he is required to approach RBI for approval under FERA or approval granted by Department of Revenue depending upon applicability of section 10(15)(iv) Section 10(15), read with section 193, of the Income-tax Act, 1961 - Exemption - Interest payments - Applicant has allotted debentures to a Mauritius company with approval of RBI - RBI has granted said approval under provisions of the Foreign Exchange Regulation Act, 1973 - Applicant-company filed application under section 245Q(1) seeking ruling on question as to whether applicant is required to deduct tax at source under laws for year ended 31-3-2002 on payment of interest to foreign company especially when foreign company has no permanent establishment in India and interest income is exempt from tax - Whe- ther approval granted by RBI under FERA cannot be equated with approval by Government of India - Held, yes - Whether to claim tax exemption under section 10(15), applicant must have in its possession, either approval granted by ECB Division, Department of Economic Affairs, Ministry of Finance on basis of which he is required to approach RBI for approval under FERA or approval granted by Department of Revenue depending upon applicability of section 10(15)(iv) - Held, yes - Whether since no such approval has been granted to applicant, it is not entitled to tax exemption under Act - Held, yes - Whether approval by RBI for terms of loan through letters does not amount to granting tax exemption by Government of India for purposes of article 11(4) - Held, yes - Whether in absence of exemption either under section 10(15)(iv) or under article 11(4), payment of interest by applicant to foreign company will attract provisions of section 193, as they stood before amendments by Finance Act, 2003 and applicant shall be obliged to deduct income-tax at rates in force on amount of interest payable - Held, yes FACTS The applicant is a resident-company engaged in the business of development of properties and allied activities. The…

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