TaxTMI 
TaxTMI 
2025 (4) TMI 396
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.... 20-. 2. The assessee has raised the following grounds of appeal: "1. The learned DRP erred in endorsing the order of the AO to assess the capital gains on mutual fund units arising from are taxable in India thereby affirming the addition of Rs. 1,35 66,368 made by the AO. 2. The Learned DRP and AO erred in holding that the short term capital gains on capital gain on debt fund of Rs. 88,75,230/- and short term capital gain on equity fund of Rs. 46,91,140/- under the head income from capital gain is taxable in India and benefits of Article 13(5) under the India -Singapore treaty are not applicable to the assessee. 3. The Ld.DRP and the AO erred in not following the order of Mumbai Tribunal in ITO v Satish Bihari....
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....nder the Double Taxation Avoidance Agreement (DTAA). The assessee had claimed that capital gains earned on the transfer of equity shares can not be charged as she is a tax resident of Singapore and the provisions of Article 13 of DTAA are applicable. However, Ld. AO did not accept the contentions of the assessee and proposed to tax on the entire amount in the draft assessment. The assessee filed objections before the Ld. DRP. However, the action of the Ld. AO was endorsed by Ld. DRP which held that the capital gains arising from the units of mutual funds that derived substantial value from assets located in India are taxable in India. Accordingly, Ld. AO proceeded to tax the short-term capital gain of Rs. 1,35,66,368/- vide assessment order....
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....dia-Singapore DTAA. Accordingly, the findings of the co-ordinate bench in this case are squarely applicable to the present case. Relevant portion of the order is reproduced below: "7. We have perused the records and considered the rival contentions carefully. The dispute is regarding taxability of capital gain arising on account of sale of mutual fund units in India by the assessee, who is a non resident based in Switzerland. The assessee has claimed the benefit of Indo-Swiss tax treaty and argued that the capital gain is not taxable in India under the provisions of Article 13(6) of the Indo-Swiss tax treaty. The said Article has been reproduced in para 3 of this order, which deals with taxability of capital gain arising on transfe....
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....confined only to deeming UTI a company and deeming the income from units as dividend. There were no specific provisions for deeming the units as shares. Hon'ble Supreme Court, therefore, upheld the view that units of UTI are not shares of companies. Though the said judgment had been rendered in the context of Explanation to section 73, therefore is also applicable to the present situation which involves the interpretation as to whether units can be considered as shares. In our view in the absence of any specific provision under the Act to deem the unit as shares, it could not be considered as shares of companies and, therefore, the provisions of Article 13 (5) (b) can not be applied in case of units. We agree with the findings of CIT(A)....
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....h of Article 13 may be taxed in India. Article 13(4) of the Tax Treaty covers within its purview capital gains arising from transfer of shares' and not any of the property. Therefore, Article 13(4) of the Tax Treaty cannot be applied in the instant case unless the units of the mutual funds transferred by the assessee qualify as shares for the purpose of Tax Treaty. The term 'share' is not defined under the Tax Treaty. As per Article 3(2) of the Tax Treaty, any term not defined under the Tax Treaty shall, unless the context otherwise requires, have the meaning which it has under the laws of the country whose tax is being applied. Therefore, the term 'share' would carry the meaning ascribed to it under the Act, an....