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of The ITAT allowed the assessee's appeal regarding capital gains exemption on equity-oriented mutual fund sales under the India-Mauritius DTAA. The AO had held that 65% of capital gains were taxable under Article 13(3A) as the underlying assets were shares. The ITAT distinguished between shares and mutual funds, emphasizing they are different securities under Indian law with distinct investor rights, regulation, and return characteristics. The tribunal noted mutual fund units cannot be treated as company shares, citing precedent that deeming provisions cannot be extended to include mutual fund units within the definition of shares. The ITAT concluded that DTAA provisions must be strictly interpreted, and distinct securities cannot be considered equivalent through purposive interpretation, thereby granting the capital gains exemption claimed by the assessee.
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