The Income Tax Appellate Tribunal (ITAT) examined the taxability...

The Income Tax Appellate Tribunal (ITAT) examined the taxability of capital gains arising from the transfer of shares of a foreign company under Article 14(4) of the India-Spain Double Taxation Avoidance Agreement (DTAA). The revenue contended that the company's immovable property exceeded 50% of its total assets, making the gains taxable in India. However, the ITAT found that the value of immovable property did not exceed 50% of the total assets based on book value or fair market value. Additionally, the assessee held only 9.65% shares indirectly, which cannot be considered a controlling interest. The ITAT held that Article 14(4) of the DTAA cannot be applied in this case, and the capital gains arising from the transfer of shares cannot be taxed in India. Consequently, the ITAT directed the Assessing Officer to delete the addition made in this regard and allowed the assessee's appeal.

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