India-Mauritius treaty protection upheld for share-sale capital loss where Mauritius residency and supporting records were accepted.

A Mauritius tax resident with a valid tax residency certificate and supporting investment and banking records was held entitled to treaty protection under Article 13(4) of the India-Mauritius DTAA on capital loss from share sale. The dispute had already been decided on identical facts in the assessee's favour for an earlier year, and no fresh material was produced to show the entity was a mere paper or conduit arrangement. On that factual matrix, treaty benefits could not be denied and the Assessing Officer's addition was deleted.

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Issues: Whether the assessee was entitled to treaty protection under Article 13(4) of the India-Mauritius DTAA on the capital loss arising from sale of shares, and whether the addition made by the Assessing Officer was liable to be deleted.

Analysis: The assessee was a tax resident of Mauritius holding a valid tax residency certificate and had furnished supporting material including investment and banking documents. The dispute on identical facts had already been decided in the assessee's favour for an earlier assessment year. No fresh material was brought to dislodge that view or to establish that the assessee was a mere paper or conduit entity so as to deny treaty protection. On the same factual matrix, the benefit of Article 13(4) could not be refused and the addition could not be sustained.

Conclusion: The assessee was entitled to treaty benefit under Article 13(4) of the India-Mauritius DTAA and the addition was deleted, in favour of the assessee.

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