9911796707
TMI Blog2013 (8) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... had received capital gain from sale of mutual funds units both long term and short term as per details given below:- (i) Long term capital gain (with indexation) ₹ 1,80,31,475/- (ii) Long term capital gain (without indexation) ₹ 11,95,52,457/- (iii) Short term capital gain ₹ 75,44,598/- 3. The assessee being a citizen of Switzerland claimed benefit of Double Tax Avoidance Agreement (DTAA) between India and Switzerland. The assessee filed tax residence certificate from Swiss authorities. It was submitted that as per Article 13(6) of the tax treaty betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of shares other than those mentioned in Paragraph 4, of a company which is a resident of a Contracting State. (a) shall be taxable in the Contracting State of which the alienator is a resident (b) notwithstanding the provision of sub-paragraph (a), India may tax gains from the alienation of shares in a company which is a resident in India. 6. Gains from the alienation of any property other than that referred to in paragraphs 1,2,3, 4 and 5 shall be taxable only in the Contracting State of which the alienation is a resident. 4. The AO however asked the assessee to explain as to why the capital gains should not be taxed in India under the provisions of Article 13(5) of the Indo-Swiss tax treaty. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in case of Apollo Tyres Ltd. (supra) was not applicable as the same had been rendered in the context of Explanation to section 73 of the Income Tax Act. The AO thus held the capital gain taxable. 5. The assessee disputed the decision of AO and submitted before CIT(A) that there was clear distinction between shares issued by Indian companies and units issued by mutual funds. The shares held by a shareholder entitles him for voting rights in the company whereas the unit holder only hold the units of mutual fund and are not entitled to voting rights in the companies in which the investments had been made by the mutual fund. The Income Tax Act has also given different treatment to shares and units of mutual funds as dividend from sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said decision of CIT(A), the revenue is in appeal before Tribunal. 6. Before us, the learned AR for the assessee reiterated the submissions made before lower authorities and argued that the case of the assessee was covered by the Judgment of Hon'ble Supreme Court in case of Apollo Tyres Ltd. (supra). It was thus pleaded that the order of CIT(A) should be upheld. The learned DR on the other hand supported the order of AO and placed reliance on the finding given in the assessment order. 7. We have perused the records and considered the rival contentions carefully. The dispute is regarding taxability of capital gain arising on account of sale of mutual fund units in India by the assessee, who is a non resident based in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation business. Hon'ble Supreme Court observed that even though the section 32(3) had created the fiction to make the UTI a deemed company and distribution of income received by the unit holder a deemed dividend, the deeming provision had to be applied for the purpose for which it had been specifically created. It was confined only to deeming UTI a company and deeming the income from units as dividend. There were no specific provisions for deeming the units as shares. Hon'ble Supreme Court, therefore, upheld the view that units of UTI are not shares of companies. Though the said judgment had been rendered in the context of Explanation to section 73, therefore is also applicable to the present situation which involves the interpretat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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