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TMI Blog2024 (10) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by the assessee and also the valuation done with regard to the overall other assets owned by the assessee. From the table extracted in the earlier part of this order, we notice that the value of immovable property as a percentage of total assets of the assessee does not exceed 50% either based on book value or as per the Fair Market Value. Therefore, we see merit in the submission of the AR that Article-14(4) of India-Spain DTAA cannot be applied in assessee's case on this count. It is an undisputed fact that assessee is holding only 9.65% of the shares indirectly in IMI Investments Two Ltd and therefore applying the ratio of the above decision it cannot be said that such holding is towards any controlling interest. As also relevant to mention here that as per UN Model Convention commentary, the provisions of Article 14(4) come into effect to prevent the case of indirect transfer of ownership of immovable property by transfer of shares owning these properties. There is merit in the submission of AR that Article 14(4) of DTAA between India and Spain cannot be applied in assessee's case. We hold that Article-14(4) of the DTAA between India and Spain cannot be applied i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is engaged in investing business in sectors such as Internet, communication, technology, engineering, health clean technologies. The assessee did not have any permanent establishment or any office in India. The assessee filed the return of income for AY 2021-22 on 15.03.2022 declaring income of Nil. In the computation of income, the assessee has shown Long Germ Capital Gain (LTCG) of Rs. 27,62,12,014/- and a Short Term Capital Loss (STCL) of Rs. 65,80,977/- on sale of shares of IMI Investments Two Ltd. and claimed the same as exempt under section 90/91 of the Act and Article-14 of India-Spain DTAA. The return was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) called on the assessee to furnish details pertaining to LTCG and STCL declared by the assessee in the computation of income. The assessee made a detailed submission before the AO with regard to the capital structure of the assessee and how the capital gain is not taxable in India as per the DTAA between India and Spain. The AO did not accept the submissions of the assessee stating that the assessee has not provided any evidence in support of the claim and how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No.14 of the DTAA between India and Spain which read as under: 1. Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in Article 6, and situated in the other Contracting State may be taxed in that other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining 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 together with the whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gains from the alienation of ships or aircraft operated in international traffic or of movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident. 4. Gains from the alienation of shares of the capital stock of a company the property of which consists, directly or indirectly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was drawn to the valuation report of JLL (page 23 24) to submit that JLL has considered various criteria for the purpose of valuing the immovable property and the lower authority are not correcting in rejecting the valuation report of JLL. 8. The ld. Departmental Representative (DR) furnished detailed written submission which is being taken on record. The main contention of the revenue in the written submission is that the valuation report of the immovable property is not reliable and therefore, the contention of the assessee that the value of immovable property is less than 50% cannot be accepted. According, the revenue is contenting the Article-14(4) is clearly applicable in assessee's case and therefore, the gain arising out of transfer of shares in IMI Investments Two Ltd. is taxable in India in the hands of the assessee. 9. We heard the parties and perused the material on record. During the year under consideration the assessee has transferred the shares in IMI Investments Two Ltd. and claimed the same as exempt under the Act as well as the DTAA between India and Spain. It is noticed from the capital structure extracted in the earlier part of this order that the share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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