TaxTMI 
TaxTMI 
2023 (11) TMI 697
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.... reported delay of 27 days in filing the appeal. The assessee has filed the application for condonation of delay, explaining the reasons for delay. 3. Having considered the submissions of the parties, we are inclined to condone the delay and admit the appeal for adjudication on merits. 4. The dispute in the present appeal is confined to taxability of long-term capital gain claimed as exempt by the assessee under Article 13(4) of India - Mauritius Double Taxation Avoidance Agreement ('DTAA'). 5. Briefly the facts are, as stated by the Assessing Officer, the assessee is non-resident corporate entity and tax resident of Mauritius having a valid Tax Residency Certificate issued by Mauritius Revenue Authorities for the impugned assessment yea....
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....lified individuals as its directors, however, no remuneration appears to have been paid to them. He further observed that as per the information available in public domain, two out of three directors hold multiple directorships in a number of companies in Mauritius. He observed, one of the directors, i.e., Emmanuel Mancion, who is a Canadian resident, is the ultimate beneficial owner of the assessee company. He observed that immediately after deriving the capital gain, the assessee has repatriated the money from Mauritius to UK company by showing it as a loan repayment. Thereafter, referring to OECD Commentry and various judicial precedents, the Assessing Officer ultimately held that, though, the assessee was having a valid TRC, however, ne....
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....nt of Mauritius on the strength of the TRC. 8. As could be seen from the facts discussed by the Assessing Officer, the assessee has invested in shares of two Indian companies, namely, M/s. Alternative Food Process Pvt. Ltd. in 2002 and EmNa Bios Diversus Pvt. Ltd. in 2010. Thus, undisputedly, the sale of shares of EmNa Bios Diversus Pvt. Ltd. giving rise to capital gain, were acquired prior to 01.04.2017 through Foreign Direct Investment (FDI). 9. Thus, as could be seen from the facts on record, the assessee has held the shares for a considerable period of time. As per Article 13(4) of India - Mauritius DTAA, capital gain derived from sale of shares acquired prior to 01.04.2017 are exempt from taxation in the source country. However, the ....
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....ns and has failed to substantiate the fact that the assessee is a conduit company through clinching evidences. Unfortunately, learned DRP without going deep into the issue factually, has simply endorsed the view of the Assessing Officer. 12. At this stage, we must observe, as per sub-section (2) of section 90 of the Act, wherever the Government of India has entered into an agreement with any other country outside India for granting relief of tax or for avoidance of double taxation, then in relation to the concerned assessee to whom the agreement applies, the provisions of the Act shall apply to the extent they are more beneficial to that assessee. In other words, if the provisions of the DTAA are more beneficial to that particular assessee....
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....ired prior to 01.04.2017, the capital gain derived from sale of such shares would be exempt from taxation in India in terms of Article 13(4) of the Indian - Mauritius DTAA. Only for the purpose of defeating assessee's claim of exemption under Article 13(4) of the treaty, the Assessing Officer has introduced the theory of tax avoidance arrangement and Conduit Company. 15. Since, the allegations of the departmental authorities that the assessee is a conduit company and has been set up under a scheme of tax avoidance arrangement remains unsubstantiated through cogent evidence brought on record, we are inclined to accept assessee's claim of exemption under Article 13(4) of India - Mauritius DTAA, qua the capital gain derived from sale of subje....