Legal dispute concerning the taxability of capital gains arising ...

Mauritian Entity Wins Tax Exemption in Share Sale to Indian Firm; Validates Tax Residency Certificate and Treaty Benefits.

September 2, 2024

Case Laws Income Tax HC

Legal dispute concerning the taxability of capital gains arising from the sale of shares by a Mauritian entity to an Indian company. The central issues revolve around the applicability of the India-Mauritius Double Taxation Avoidance Agreement (DTAA), beneficial ownership of shares, substance over form principle, treaty shopping, and grandfathering clause under Article 13(3A) of the DTAA. The court held that the Mauritian entity cannot be considered lacking economic substance or engaged in treaty abuse solely based on its incorporation in Mauritius. Investments routed through Mauritius cannot be presumed illegitimate, and the issuance of a Tax Residency Certificate (TRC) by Mauritius authorities is sacrosanct. The court emphasized that treaty benefits can only be denied in cases of sham transactions, fraud, or entities acting as mere conduits, subject to stringent standards of proof by the Revenue authorities. The court affirmed that the transaction was grandfathered under Article 13(3A) of the DTAA, excluding capital gains from taxation for shares acquired before April 1, 2017. Domestic tax legislation cannot override treaty provisions, and the Revenue cannot impose additional barriers beyond the Limitation of Benefits (LOB) clause in the DTAA. The court rejected the Revenue's arguments regarding beneficial ownership and held that the.

View Source

← Previous Next →

Legal dispute concerning the taxability of capital gains arising ...

Mauritian Entity Wins Tax Exemption in Share Sale to Indian Firm; Validates Tax Residency Certificate and Treaty Benefits.

September 2, 2024

Case Laws Income Tax HC

You may also like:

Exemption u/s 10(26) - Exemption to individual members of Scheduled Tribes - Whether a partnership firm, formed by individual partners who are entitled to an exemption...

Income deemed to accrue or arise in India - shared services - the CIT(A) has failed to appreciate that the year on year rendition of services by the assessee to the...

Accrual of income in India - FTS - Existence of a PE - Determining income on presumptive basis attributable towards Permanent Establishment ("PE" ) - Tax Authorities...

Partnership firm dissolution, accounts settlement, and distribution of shares. Receiver appointed to manage assets until winding up. Defendants restrained from disposing...

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...

Addition u/s 68 - unexplained cash credit in the form of share capital with premium - when all these corporate entities are still existing and doing business and have...

Transfer of an industrial undertaking from urban to rural area by a partnership firm qualifies for exemption u/s 54G of the Income Tax Act. The assessee, a partner in...

Sikim Income Tax Rules, 1948 versus Indian Income Tax Act, 1961 - Since the assessee was not resident within the territories comprised in the of State of Sikkim, the...

Refund of SAD - Goods are liable for sales tax but only under certain conditions the Appellant-assessee can sell the goods without payment of sales tax. An exemption...

Appellant challenged the auction sale of shares by the Liquidator, claiming undervaluation and lack of proper valuation, as shares were sold only at book value despite...

Payment of Interest for Sales Tax Default - interest paid by the assessee to the sales tax department on arrears of sales tax/purchase tax was an admissible deduction - AT

The ITAT considered an addition made u/s 68 for the sale of shares as an 'unexplained source of investment'. The assessee, a foreign company tax resident of Mauritius,...

Taxability of capital gain arising on sale of shares under the treaty provisions - AO and DRP have rejected assessee’s claim by holding that assessee being a mere paper...

Claim of exemption u/s 10(38) on sale of share on capital gains earned on it - Conversion of stock in trade of shares into investment - benefit of exemption allowed - HC

Assessee's claim for exemption u/s 10(35) was rejected by CPC while processing return u/s 143(1)(a), which attained finality as assessee failed to challenge it before...

Quick Updates: