9911796707
TMI Blog2024 (7) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned current year can be drawn based on such documentary evidences. TRC certificate, Category 1 Global Business License, and SEBI registration clearly demonstrate that the assessee is a genuine tax resident of Mauritius. Except the information received from SEBI, the Assessing Officer has failed to bring on record any adverse material which can establish beyond any shadow of doubt that the control and management of the assessee was outside Mauritius and the beneficial owner was a resident of UAE. Information available with the AO clearly suggests that in the year under consideration the assessee had three directors, all residents of Mauritius. Even, sample copies of Board Resolutions furnished in the paper book demonstrate that Board meetings were conducted in Mauritius. The very fact that the assessee has continued its business activities in India proves that it is not a fly by night operator created only for the purpose of availing Treaty benefits. In so far as applicability of protocol dated 07.03.2024 amending the India-Mauritius Treaty, undisputedly as per Article 3(1) to the protocol, it will come into force only after each of the contracting States notify it. On a specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from sale of shares/ security, under Article 13 of the India-Mauritius Double Taxation Avoidance Agreement (DTAA). Briefly, the facts are, the respondent assessee is a non-resident corporate entity, incorporated in Mauritius. Assessee is recognized as a tax resident of Mauritius on the strength of Tax Residency Certificate (TRC) issued by the Revenue Authority in Mauritius. The assessee is basically an investment fund and carries out investment activities. The assessee is also registered as a Foreign Portfolio Investor (FPI) with Securities and Exchange Board of India ( SEBI ), as per SEBI Regulations. In terms of its business activities, the assessee had made investments in purchase of shares, trading in futures and options etc. In the year under consideration assessee earned revenue from sale of shares of Indian companies, trading in futures and options, dividend from Indian companies etc. Insofar as capital gain derived from sale of shares acquired prior to 01.04.2017, the assessee did not offer them to tax by claiming exemption under Article 13(4) of India-Mauritius Treaty. Capital gain derived from sale of shares acquired after 01.04.2017 and sold before 31.03.2018 was offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a TRC alone is not sufficient proof of control and management of the applicant company in Mauritius. Therefore, it may be safely inferred that the applicant company is a mere conduit/shell company. 6. Thus, ultimately, he concluded that since the control and management of the assessee company lies outside Mauritius and in UAE, the beneficial owner being resident of UAE, the assessee company is not entitled to avail benefit of India- Mauritius Treaty. Accordingly, the Assessing Officer rejected assessee s claim of exemption under Article 13(3B) and 13(4) of the India-Mauritius Treaty and brought to tax the entire capital gain derived from sale of shares and futures and options etc. 7. Contesting the above said decision of the Assessing Officer, assessee preferred appeal before learned First Appellate Authority. After considering the submissions of the assessee in the context of facts and materials on record, learned First Appellate Authority, being satisfied that the assessee is a genuine tax resident of Mauritius, allowed assessee s claim of exemption under the India-Mauritius Tax Treaty. 8. Before us, learned Departmental Representative submitted that specific information was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been done. 10. Proceeding further, he submitted that the protocol between India and Mauritius authorities providing for amendment to India-Mauritius Treaty, since, has not been notified by both the Governments, the provision of the protocol cannot be applied. In this context he relied upon the decision in the case of Assessing Officer v. Nestle SA, 2023 SCC OnLine SC 1372. He submitted, since the assessee is holding a valid TRC and is Category 1 global business license holder and since all the directors of the assessee company are residents of Mauritius; and all Board Resolutions are passed in Mauritius, the assessee has to be treated as a tax resident of Mauritius, thereby eligible to avail the Treaty benefits. He submitted, the erroneous factual findings of the Assessing Officer have been clearly pointed out by the learned First Appellate Authority after thoroughly examining the facts and materials available on record. He submitted, simply based on certain information received from SEBI the Assessing Officer has concluded that Directors of the assessee company are not residents of Mauritius and the beneficial ownership of the assessee company lies with a person residing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has no commercial substance in Mauritius as neither any business activity is carried on in Mauritius nor any expenses have been incurred by the assessee in Mauritius. The aforesaid observations of the Assessing Officer primarily are based upon certain information/ document issued by the SEBI in response to notice issued u/s 133(6) of the Act. However, learned First Appellate Authority, after examining the facts and materials on record, has recorded a categorical factual finding that the documents received from SEBI did not pertain to the assessment year under dispute but for some other assessment year. Therefore, the fact relating to control and management of the assessee as well as beneficial ownership cannot be ascertained from such documents. 13. On perusal of materials on record we agree with the aforesaid factual finding of learned First Appellate Authority. The information received from SEBI, which has been reproduced in the assessment order, clearly indicates that it did not pertain to assessment year under dispute but to subsequent assessment years. Therefore, no conclusion regarding control and management of the assessee company or beneficial ownership for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust observe, in the grounds raised the Revenue has challenged the decision making process of learned First Appellate Authority basically on the following three points: (i) Commissioner (Appeals) has ignored the fact that the assessee failed to submit relevant documents like qualifications of its Directors, details about its key employees etc. which could prove that the decision making of the assessee lies outside Mauritius. (ii) Commissioner (Appeals) is wrong in allowing treaty benefit when the control and management of the assessee is outside Mauritius. (iii) Commissioner (Appeals) failed to appreciate that intent of DTAA is not only avoidance of double taxation but also prevention of fiscal evasion. 18. After carefully going through the observations of learned First Appellate Authority in the context of facts and material available on record, we do not find any deficiency in the order of learned First Appellate Authority on the points raised by Revenue, as noted above. Under these circumstances, we do not find merit in the grounds raised by Revenue. Accordingly, they are dismissed. Decision of learned First Appellate Authority is upheld. 19. Appeal is dismissed. Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
