ABN Amro Bank, Stockholm not Swedish Resident as per DTAA: ITAT holds Bharti Airtel required to Deduct TDS on Loan Interest

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that ABN Amro Bank, Stockholm, cannot be considered a resident of Sweden as per the Double Taxation Avoidance Agreement (DTAA) between India and Sweden. Consequently, the tribunal held that Bharti Airtel was required to deduct Tax at Source (TDS) on the interest paid on a loan obtained from the bank. Airtel had argued that under the DTAA, the interest was not taxable in India, and therefore, no TDS was deductible. However, the ITAT observed that the bank was a branch of a Netherlands-based entity and was not independently liable to tax in Sweden. Since it did not qualify as a "resident of Sweden" under the specific definition in the DTAA, the benefits of the treaty were not applicable. This decision underscores the importance of satisfying the residency criteria defined within a DTAA to claim its benefits.