Motivated by the pionieering experiments of Buks et al. [Nature 391, 871 (1998)] we investigate the visibility of the Fano effect in a single-dot Aharonov-Bohm interferometer which is Coulomb-coupled to a nearby quantum dot. The latter acts as a 'Which Path Detector' and is coupled to two leads on which a finite bias is applied. Using the non-equilibrium Keldysh-Green function formalism we compute the currents through the detector and the interferometer. We take into account the first two contributions to the interaction selfenergy and emphasize the correction to the Landauer formula which appears beyond the single-particle approximation. Particular attention is given to the coherence properties of the interferometer in the presence of the electron-electron interaction between the embedded dot and the detector. We show that when the detector is subjected to a finite bias the amplitude of Aharonov-Bohm oscillations of the current through the interferometer decreases. The Fano line is in turn rather stable under interaction. Our results generalize an earlier work of Silva and Levit [Phys. Rev. B 63, 201309 (2001)] and complement the existing description of the controlled dephasing.