India: No separate notification required, “most favoured nation” treaty clause (tribunal decision)

A tribunal decision concerning “most favoured nation” treaty clause

A tribunal decision concerning “most favoured nation” treaty clause

The Pune Bench of the Income-tax Appellate Tribunal held that no separate notification by India is required to secure the benefit of the “most favoured nation” (MFN) clause under the India-Spain income tax treaty.

The tribunal observed that once the India-Spain income tax treaty was in force, the Protocol to the treaty which contains the MFN clause and was signed on the same date was automatically entered into force along with the treaty. The tribunal found that the recent Central Board of Direct Taxes (CBDT) guidance (Circular No. 3/2022, 3 February 2022) specifying the need for a separate notification for importing the beneficial treatment from another tax treaty under the MFN clause overlooks the plain language of the provisions of Section 90(1) of the Income-tax Act, 1961, which treats the MFN clause as an integral part of the treaty. Read TaxNewsFlash

The case is GRI Renewable Industries S.L. v. ACIT (ITA No. 202/Pun/2021).

Read a February 2022 report prepared by the KPMG member firm in India


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