Indian Appellate Tribunal holds Morgan Stanley’s income from Indian Depository Receipts exempt under art. 22 of India-Mauritius DTAA

June 09, 2021 2 minute read

The Indian Income Tax Appellate Tribunal (Appellate Tribunal) allowed the assessee’s (Morgan Stanley Mauritius Co Ltd) appeal and held income from Indian Depository Receipts (IDRs) as taxable in the hands of Mauritian investors under Indian domestic tax law, but extended the exemption under article 22 of the India-Mauritius DTAA.




The assessee is a tax resident of Mauritius and an investor in IDRs issued by Standard Chartered Bank, India Branch (SCB-India) with underlying assets as shares of Standard Chartered Bank UK (SCB-UK), for which Bank of New York Mellon USA (BNY-US) is the custodian, while SCB-India acts as the depository. For assessment year 2015-16 (equivalent to financial year 2014-15), the assessee received INR 97.4 million from SCB-India that was held taxable as dividend by the Revenue (Income Tax Department) on the basis that dividends were received by IDR holders when they were first deposited in their bank accounts in India.