Interest received from Swiss Bank Account can’t be Taxed in India since the same is not mentioned in DTAC: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has recently deleted the income tax addition made by the Assessing Officer in respect of the interest received from the Swiss Bank Account for the reason that the same is not mentioned in the Double Taxation Avoidance Convention (DTAC).

The bench comprising Judicial Member Mahavir Prasad and Accountant Member N K Billaiya held that in the absence of any such mention of any interest paid by the bank to the assessee, the income tax department cannot make an addition, that too applying the interest rates applicable in India.

The income tax department, on the basis of the information received from the Government of France under the Double Taxation Avoidance Convention (DTAC) that the assessee is a beneficiary in the bank account with HSBC, Geneva, conducted a search in the premises of the assessee. While concluding the assessment proceedings, the Assessing Officer assumed that in India a Savings Bank account holder earns interest at the rate of 4%, therefore, applying the same rate, the Assessing Officer made the impugned addition.

Before the authorities, the assessee argued that he has no knowledge of the said bank account, as his deceased wife Smt. Sudesh Madhok was managing the business as Proprietor of M/s Indian Artwares Corporation from 1970 till her death in the year 2005.

While granting relief to the assessee, the Tribunal held that the action of the Assessing Officer defies the taxability of the concept of real income.

“The undisputed fact is that in the alleged sheets of bank deposits received from the French government under DTAC, there is no mention of any interest paid by the bank to the assessee. Therefore, it is illogical to compute interest and that too at the rate prevailing in India. Since there is no documentary evidence to support the presumption of the Assessing Officer, we do not find any reason to interfere with the findings of the ld. CIT(A),” the bench said.

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