AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 1008
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....eciating that even if transfer of shares of DFHPL was undertaken directly by the shareholders and / or the alleged beneficial owner, the benefit of Article 13 (4A) of the DTAA would come into operation, since the shareholders and / or the alleged beneficial owner were tax residents of Singapore, and therefore, it cannot be held that the affairs of the Appellant were arranged with the primary purposes to take advantage of the benefit in Article 13 (4A) of the DTAA. 21. That the AO/ DRP erred in denying the benefit of Article 13 (4A) of the DTAA to the Appellant qua capital gains earned by the Appellant on transfer of shares of DFHPL in complete disregard to the fact that the investments in DFHPL were made by the Appellant in 2016 and income arising on transfer thereof was specifically exempt from purview of General Anti-Avoidance Rule as contained in Chapter X-A of the ITA read with Rule 10 U (1) (d) of the Rules. 24. That the AO / DRP erred in denying the Appellant the benefit of Article 13 (4A) of the DTAA in disregarded to Rule 10U (1) (a) of the Rules, which exempts arrangements having tax benefit not exceeding INR 3,00,00,000/- from the purview of General Anti....
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....te issued by the other tax jurisdiction ? 9. At this stage it would be pertinent to refer to the decision of the Hon'ble High Court of Delhi in the case of Black Stone Capital Partners, Singapore in W.P.(C) 2562/2022 decided on 30.01.2023 and the most relevant observations of the Hon'ble High Court pertinent to the facts of the appeal under consideration read as under :- "73. In the objections dated 28th December, 2021, the petitioner has furnished the details of compliance with the LOB clause to the India- Singapore DTAA. The Assessing officer has not questioned the satisfaction of the LOB clause or the Independent Chartered Accountant certificate at any stage except in the present proceedings. Consequently, the petitioner is a bonafide entity and not a shell/conduit entity as it complies with the LOB clause to the India-Singapore DTAA as the expenditure has been incurred in Singapore and the same has been certified by an independent chartered accountant and accepted by the authorities in Singapore i.e. Income Tax authorities, Monetary Authority of Singapore. Accordingly, the allegation of treaty shopping is irrelevant in the present case as the India- Singapore DTAA h....
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....benefits. 80. Article 1 of the India-Singapore DTAA states that the tax treaty applies only to one or more person who is a resident of one or more contracting state. Article 3(l)(j) of the said DTAA defines a person to include an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States. The relevant extract of Article 3(1) (j) is provided below: "(]) the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States" 81. Further, as per Article 3(l)(d) of the India- Singapore DTAA, a Company has been inter-alia defined as "any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States". 82. Article 4 of the India-Singapore DTAA states that the term "resident of a Contracting State" means any person who is a resident of a Contracting State in accordance with the taxation laws of that State. As per Singapore tax laws, a compan....
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....ce was issued was that the recipients of the show cause notice were mostly 'shell companies' incorporated in Mauritius, operating through Mauritius, whose main purpose was investment of funds in India It was alleged that these companies were controlled and managed from countries other than India or Mauritius and as such they were not "residents" of Mauritius so as to derive the benefits of the DTAC. These show cause notices resulted in panic and consequent hasty withdrawal of funds by the FIIs. The Indian Finance Minister issued a Press note dated April 4, 2000 clarifying that the views taken by some of the income-tax officers pertained to specific cases of assessment and did not represent or reflect the policy of the Government of India with regard to denial of tax benefits to such FIIs. Thereafter, to further clarify the situation, the CBDT issued a Circular No. 789 dated 13.4.2000. Since this is the crucial Circular, it would be worthwhile reproducing its full text. The Circular reads as under.... xxx xxx xxx xxx 49. As early as on March 30, 1994, the CBDT had issued circular no. 682 in which it had been emphasised that any resident of Mauritius derivin....
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..... Singapore is developing itself as a base for investments in South East Asia and China. Mauritius today provides a suitable treaty conduit for South Asia and South Africa. In recent years, India has been the beneficiary of significant foreign funds through the "Mauritius conduit". Although the Indian economic reforms since 1991 permitted such capital transfers, the amount would have been much lower without the India-Mauritius tax treaty. 124 Overall, countries need to take, and do take, a holistic view. The developing countries allow treaty shopping to encourage capita and technology inflows, which developed countries are keen to provide to them. The loss of tax revenues could be insignificant compared to the other nontax benefits to their economy. Many of them do not appear to be too concerned unless the revenue losses are significant compared to the other tax and non-tax benefits from the treaty, or the treaty shopping leads to other tax abuses....... xxx 134. We may also refer to the judgment of Gujarat High Court in Banyan & Berry v. CIT (1996) 222 ITR 831/84 Taxman 515 where referring to McDowell & Co. Ltd.'s case (supra), the Court observed: ".....
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....gibility condition but shall not constitute sufficient evidence of residency and shall not be binding on the authorities. Sub- Section 5 of Section 90 of the Act sought to be introduced by way of proposed amendment is reproduced hereinbelow: - "21. In section 90 of the Income Tax Act,- (a) to (b) ** (c) after sub-section (4) and before Explanation 1, the following subsection shall be inserted, namely: - "(5) The certificate of being a resident in a country outside India or specified territory outside India, as the case may be, referred to in subsection (4), shall be necessary but not a sufficient condition for claiming any relief under the agreement referred to therein." 90. However, serious concerns were expressed by the Foreign investors with regard to the aforesaid proposed amendment. On the very next day, namely 1st March, 2013 the Finance Minister vide Press release clarified, "The Tax Residency Certificate produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident stat....
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.... 10U of the IT Rules 1962. Chapter X-A not to apply in certain cases, Rule 10U(1)(a) read as under :- "an arrangement where the tax benefit in the relevant assessment year arising in aggregate, to all parties to an arrangement does not exceed the sum of Rs.3 crores". 16. Further Rule 10 U (1) (d) provides :- "any income accruing or arising to or deemed to accrue arise to or received or deemed to be received by any person from transfer of investments made before the first day of April, 2017 by such person." 17. In the light of the aforementioned relevant provisions and rules, in the case in hand the short term capital gain is Rs.1,92,63,473/- the tax on which is below the threshold set out in Rule 10 U (1) (a) (supra) further the impugned shares were acquired by the assessee on 22.08.2016 which is prior to the cut off date set out in Rule 10 U (1)(d) (supra). 18. On these undisputed facts it can be safely concluded that assuming domestic GAAR provision are applicable but for the aforestated facts the treaty benefit cannot be denied to the assessee. 19. The AO / DRP have also invoked the doctrine "substance over form" to deny the benefit of Article 13 (4....
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....DIVISION for COMPTROLLER OF INCOME TAX Document 3 Tax Reference No: 2013156162 Date: 18 Mar 2019 REVERSE AGE HEALTH SERVICES PTE. LTD. 138 CECIL ST #18-00 SINGAPORE 069538 NAND REVEN AUTHORITY OF SINGAPORE 55 Newton Road Revenue House Singapore 307987 For enquiries, please call: Tel: 1800-3566622 ctmail@iras gov sg Dear Sir/Madam CERTIFICATE OF RESIDENCE FOR THE PURPOSE OF CLAIMING BENEFIT UNDER THE SINGAPORE/INDIA DTA FOR CAPITAL GAIN In response to your request dated 06 Jun 2018, it is confirmed that your company is resident in Singapore for income tax purposes for the Year of Assessment 2019. Yours faithfully CHOW WAI YEE (MS) ASSISTANT COMMISSIONER CORPORATE TAX DIVISION for COMPTROLLER OF INCOME TAX Document 4 Tax Reference No Date MR NANDA SUMEET 31 TANGLIN RD #03-04 SINGAPORE 247912 Dear Sir : GXXXX574K : 26/08/2021 155 INLAND REVENU AUTHORITY OF SINGAPORE 55 Newton Road Singapore 307987 Tel: 1800-3568300 CERTIFICATION OF SINGAPORE TAX RESIDENCE Based on the information provided in your request dated 19 Aug 2021, it is confirmed that you wer....