The Appellant, a Mauritian entity, is controlled and managed by ...

Mauritian entity with resident directors held tax resident despite treaty shopping allegations. Funds routed via Cayman entities for genuine investment platform.

Case Laws     Income Tax

August 6, 2024

The Appellant, a Mauritian entity, is controlled and managed by its board of directors in Mauritius, comprising two Mauritian resident directors and one US resident director. Board meetings were physically chaired in Mauritius, with the majority of directors being Mauritian residents. The tax authorities failed to rebut the statutory evidence of the Tax Residency Certificate with cogent evidence and merely based on suspicion and inferences, held the assessee engaged in treaty shopping. The assessee had no funds of its own due to its nature as an investment platform, and any gains would be transferred to initial investors. The assessee's association with Cayman Island entities does not taint its genuine activities as an investment platform. The minuscule percentage of funds invested in India compared to investments across various economies rebuts inferences questioning the substance over form. The assessee's appeal was allowed.

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