Principle of Mutuality - Interest income from Nostro/Vostro with bank branches

Facts:

Assessee a branch of Rabobank, Netherlands had Nostro/Vostro accounts with all its counterparts on which they had paid interest to its headoffice/branches which was claimed as not taxable on principles of mutuality as per Sumitomo Mitsui Banking Corporation v. DDIT (2012) 145 TTJ 649 (Mum.)(SB) : 2012 TaxPub(DT) 2235 (Mum-Trib) decision. CIT(A) accepted the stand of the assessee also holding that amendment to section 9(1)(v) vide Finance Act, 2015 is only prospective w.e.f. 01-04-2016 and cannot be applied to the assessee. Aggrieved revenue went in appeal to ITAT -

Held against the revenue that the interest is not taxable on principles of mutuality and the amendment in section 9(1)(v) vide Finance Act, 2015 is prospective.

Applied:

JP Morgan Chase Bank N.A. v. DCIT, (2020) 183 ITD 190 (Mumbai-Trib.)

Ed. Note: Reference be made to Flash no. 102/2023/Credit Suisse AG v DCIT/ITA no.794/Mum./2022 (Assessment Year : 201617)/ITA no.795/Mum./2022 (Assessment Year : 201718)/Mum ITAT/Favour of the Assessee/24-03-2023 : 2023 TaxPub(DT) 1931 (Mum-Trib) where it was held that even amendment under section 9(1)(v) cannot fasten liability in such cases.

Decision of BNP Paribas v. ACIT, in ITAs No. 1076/Mum./2021 and 1670/Mum./2022, vide order dated 24-01-2023 : 2023 TaxPub(DT) 1468 (Mum-Trib) also be referred to.

Case: Dy. CIT v. Cooperative Rabobank U.A. 2023 TaxPub(DT) 2477 (Mum-Trib)