2009 (7) TMI 1289 - AT - Income Tax

Summary

Issues involved: Appeal of revenue against deletion of addition of long term capital gain u/s 143(1) by AO, interpretation of Articles of Indo Mauritius DTAA.

Summary:
The assessee, a Mauritius incorporated company, filed its return declaring income and claimed exemption from tax on capital gains in India u/s DTAA between India and Mauritius. AO disallowed the claim citing pending disputes and non-resident status in previous years. CIT(A) allowed the claim based on ITAT's reversal of previous order taxing the capital gains. The issue revolved around the interpretation of the term "wholly" in control and management u/s 6(3)(ii) of IT Act. The DR argued against circulars issued by CBDT, while the AR supported the validity of circular no.789 dated 13.04.2000 based on Supreme Court's decision in UOI vs. Azadi Bachao Andolan. The Tribunal upheld CIT(A)'s order, citing the Apex Court's decision in favor of the assessee and against the revenue, thereby dismissing the appeal.

This judgment highlights the significance of DTAA provisions, interpretation of legal terms, and the binding nature of circulars issued by CBDT in determining tax liability on capital gains for non-resident companies like the assessee.