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TMI Blog2014 (2) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... sions for deeming the units as shares - units of UTI are not shares of companies - in the absence of any specific provision under the Act to deem the unit as shares, it could not be considered as shares of companies and, therefore, the provisions of Article 13 (5) (b) cannot be applied in case of units – the order of the CIT(A) upheld that provisions of Article 13(6) are applicable in case of units as per which the capital gain cannot be taxed in India – Decided against Revenue. - ITA No. 4627/Mum/2009 - - - Dated:- 14-8-2013 - Shri Rajendra Singh And Shri Vivek Varma,JJ. For the Appellant : Mr. R. S. Srivastava For the Respondent : Mr. Nitesh Joshi ORDER Per Rajendra Singh, AM. This appeal by the revenue is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may also be taxed in that other State 3. Gains from the alienation of ships or aircraft operating in International Traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 4. Gains from alienation of shares of a company, the property of which consists principally of immovable property situated in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective investment routes known as mutual funds. The capital gain was basically attributable to gains in of companies in which mutual funds had made investments. Therefore, effectively the gain were from alienation of shares of companies resident in India. Therefore, the AO held that provisions of Article 13(5) (b) were applicable and the capital gains was taxable in India. AO also observed that the assessee at the time of occurrence of capital gain had paid taxes in India and was now claiming refund during the course of assessment which shows that the assessee himself was aware that the capital gain was taxable in India and he just took a chance in the assessment to somehow claim the refund. AO also observed that the judgment of Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies. CIT(A) also observed that judgment of Hon'ble Supreme Court in case of Apollo Tryres (Supra) though rendered in the context of section 73 was clearly applicable. In that case it has been categorically held that units are not shares. The principle laid down will apply in the present case also. Merely because the benefits of DTAA had not been claimed by the assessee at the time of obtaining certificate u/s 197 is no ground to deny the benefits available under the law. CIT(A) accordingly held that the assessee was correct in claiming that units of mutual funds are not shares of Indian companies and, therefore, provisions of Article 13(6) were applicable. CIT(A) thus held that capital gain was not taxable in India. Aggrieved by the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been given different treatment in the Income Tax Act. Reliance has been placed on the judgment of Hon'ble Supreme Court in case of Apollo Tyres (Supra) in which it has been held that units of UTI are not shares of companies. We have carefully perused the said judgment. In that case the revenue authorities had noted that u/s 32 (3) of UTI Act, trust had been deemed to be a company and any distribution received by unit holder from the trust had been deemed to be income by way of dividend. The revenue, therefore, argued that unit of UTI will have to be considered as shares and accordingly the provisions of Explanation to section 73 shall apply and the business of shares has to be considered as speculation business. Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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