Mauritius Tax Residency Certificate shifts burden to Revenue; treaty benefits cannot be denied on suspicion alone.

A valid Mauritius Tax Residency Certificate is treated as statutory evidence of residence and shifts the burden to the Revenue to prove, with cogent material, that the assessee is a conduit or treaty-shopping vehicle. Applying CBDT Circular Nos. 682 and 789 and the cited Supreme Court authorities, the note explains that the Revenue must rebut treaty entitlement by evidence, not suspicion. On the factual material discussed-Mauritius incorporation, office, resident directors, board meetings, records, audited accounts, tax filings, and investment decisions-the Tribunal found no sufficient basis to deny India-Mauritius treaty relief. Foreign group links and substance-over-form arguments, by themselves, were held inadequate to displace the treaty-residence claim.

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Issues: Whether the assessee, a Mauritius resident company holding a Tax Residency Certificate, was entitled to India-Mauritius treaty benefit on capital gains and whether the Revenue had rebutted the presumption arising from the certificate by proving that the assessee was a conduit or treaty-shopping vehicle.

Analysis: The Tribunal noted that the Tax Residency Certificate issued by Mauritius, read with CBDT Circular Nos. 682 and 789 and the governing Supreme Court authorities, constitutes statutory evidence of residence and shifts the burden to the Assessing Officer to establish by cogent material that the assessee was merely a conduit created and run for treaty shopping. It examined the assessee's incorporation, investment platform function, office in Mauritius, resident directors, board meetings, maintenance of records, audited accounts, tax filings in Mauritius, and the manner in which investment and divestment decisions, including the sale of Policybazaar shares, were taken and executed. On that material, the Tribunal found that the Revenue had relied on suspicion and inferences rather than evidence sufficient to displace the treaty-residence claim. The presence of foreign group links and the application of the substance-over-form principle were held insufficient, by themselves, to deny treaty relief.

Conclusion: The assessee was entitled to the treaty benefit and the capital gains could not be denied on the ground of treaty shopping or conduit structure.

Final Conclusion: The tax authorities' denial of treaty relief was set aside and the assessee's appeal succeeded.

Ratio Decidendi: A valid Mauritius Tax Residency Certificate shifts the burden to the Revenue to prove, with cogent evidence, that the assessee is a conduit or treaty-shopping vehicle; absent such proof, treaty benefits cannot be denied merely on suspicion or on generalized reliance on substance over form.

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