TaxTMI 
TaxTMI 
2024 (7) TMI 1275
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....t the assessee is eligible for availing benefit of India- Mauritius tax treaty even when the control and management of the company is based outside of Mauritius. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the intent of DTAA is not only avoidance of double taxation but also prevention of fiscal evasion, which was brought out clearly in the assessment order in the present case. 4. The appellant craves to add, amend, modify or alter any grounds of appeal at any time or before the hearing of the appeal." 3. As could be seen from the grounds raised, lis between the parties is concerning assessee's claim of exemption on capital gains, derived from sale of shares/ security, under Article 13 of the India-Mauritius Double Taxation Avoidance Agreement (DTAA). Briefly, the facts are, the respondent assessee is a non-resident corporate entity, incorporated in Mauritius. Assessee is recognized as a tax resident of Mauritius on the strength of Tax Residency Certificate (TRC) issued by the Revenue Authority in Mauritius. The assessee is basically an investment fund and carries out investment activit....
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.... The Assessee company is making different claims as per its conveniences with its submissions wide various replies. This clearly reflects the deliberate attempt to hide the information and mis-guiding the Income Tax Authorities about its claim. Therefore, it becomes clear that the directors in the Assessee company are just for namesake the actual decision-making lies outside Mauritius. The Assessee and its holding company were just used as corporate layers to channel funds of the tax residents of the United Arab Emirates through Mauritius to India The Assessee is not doing any bonafide business activity and was just being used to channelize funds to India to avail treaty benefits. The applicant company has no commercial substance. Mere possession of a TRC alone is not sufficient proof of control and management of the applicant company in Mauritius. Therefore, it may be safely inferred that the applicant company is a mere conduit/shell company." 6. Thus, ultimately, he concluded that since the control and management of the assessee company lies outside Mauritius and in UAE, the beneficial owner being resident of UAE, the assessee company is not....
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....sessee to avail benefit of India-Mauritius Tax Treaty. He submitted, as per Article 13(4) of the DTAA, capital gain derived from sale of shares, acquired prior to 01.04.2017 is exempt from taxation. He submitted, shares acquired after 01.04.2017 but sold prior to 31.03.2019, though, is subject to tax, however, beneficial tax rate would apply in terms of Article 13(3B). He submitted, the limitation of benefit (LOB) clause under Article 27A of the Treaty, applies to Article 13(3B) and not 13(4). He submitted, even the LOB clause is not applicable to the assessee as none of the conditions mentioned therein are fulfilled. He submitted, in case the Revenue authorities wanted to over-ride the pre conditions they should have invoked the machinery provision contained in Section 144BA of the Act, which has not been done. 10. Proceeding further, he submitted that the protocol between India and Mauritius authorities providing for amendment to India-Mauritius Treaty, since, has not been notified by both the Governments, the provision of the protocol cannot be applied. In this context he relied upon the decision in the case of Assessing Officer v. Nestle SA, 2023 SCC OnLine SC 1372. He submi....
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....uritius and the Mauritius Revenue Authority has issued TRC in favour of the assessee for the year under consideration. Assessee also holds Category 1 Global Business License issued by the Financial Services Department, Mauritius. The assessee has been registered as a FPI by SEBI under the SEBI Regulations and the registration continues till date. It is also a fact that the assessee is held by Athena Capital Limited, another Mauritius based company. 12. As discussed earlier, assessee's claim of exemption of capital gain under Article 13(3B) and 13(4) of India-Mauritius DTAA has been primarily denied by the Assessing Officer on the ground that the beneficial owner of the assessee is an UAE resident, hence the control and management of the assessee company is based out of Mauritius and in UAE. Of course, the Assessing Officer has also commented that the assessee has no commercial substance in Mauritius as neither any business activity is carried on in Mauritius nor any expenses have been incurred by the assessee in Mauritius. The aforesaid observations of the Assessing Officer primarily are based upon certain information/ document issued by the SEBI in response to notice issued u/s....