2013 (12) TMI 994 - AT - Income Tax

Eligibility for benefits of DTAA DTAA between Indo-UAE - Held that - The assessee is entitled to benefits of the DTAA thereby granting exemption from capital gains Decided against Revenue.

Summary

Issues:
Interpretation of Double Taxation Avoidance Agreement (DTAA) between India and UAE regarding taxation of capital gains by non-resident Indian residing in UAE.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai concerned the interpretation of the DTAA between India and UAE regarding the taxation of capital gains by a non-resident Indian residing in Dubai, UAE for the assessment year 2008-2009. The main issue revolved around whether the assessee was entitled to the benefits of the DTAA, thereby exempting the capital gains from taxation in India.

The Assessing Officer had initially held that since individuals are not taxable in UAE, the assessee could not be considered a "resident of the contracting state" as per Article 4 of the Indo-UAE DTAA. Consequently, the income from capital gains was taxed in India. However, the learned CIT(A) ruled in favor of the assessee, allowing the benefit of the DTAA.

During the proceedings, the assessee's counsel presented a previous order by the Tribunal in the assessee's favor for the preceding assessment year, where a similar appeal by the Revenue was dismissed on the same grounds. The Departmental Representative also acknowledged the similarity of facts between the current appeal and the previous case.

After considering the arguments and reviewing the relevant material, the Tribunal referred to its earlier decision where it had granted the assessee exemption from capital gains tax under the DTAA. Given the similarity of facts between the two cases, the Tribunal upheld the order of the CIT(A) and dismissed the appeal by the Revenue, affirming the assessee's entitlement to the benefits of the DTAA.

In conclusion, the Appellate Tribunal ITAT Mumbai upheld the decision of the CIT(A) and dismissed the appeal by the Revenue, confirming that the assessee was entitled to the benefits of the DTAA, and therefore, the capital gains were not taxable in India for the assessment year in question.