TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 160
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....ssessment year 2018-19. 2. Shri Dhanesh Bafna, appearing on behalf of the assessee submits that the assessee is a tax resident of Mauritius. The assessee is an Investment Holding Company. The assessee has obtained Global Business License from the Financial Services Commission Mauritius to carry out investment activities. During the period relevant to assessment year under appeal, the assessee has transferred share of only one Indian Company i.e. BPTP Ltd. (unlisted shares) for a consideration of Rs. 129,86,14,415/-. The said transaction resulted in Long Term Capital Loss of Rs. 51,87,87,443/-. The said loss was duly reported by the assessee in its return of income for AY 2018-19. The Assessing Officer (AO) in Draft Assessment Order disag....
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....he is not pressing ground no. 2 of appeal challenging validity of reassessment proceedings. The ld. AR further submits that if ground no. 5 of appeal is allowed, the other grounds of appeal would become academic. 5. Per contra, Shri M.S Nethrapal representing the department vehemently defended the impugned order. The ld. DR submits that the assessee is merely a paper company and has been created with sole purpose of evading tax. The ld. DR vehemently placed reliance on para 6.4.2 of DRP directions, the same is reproduced as under:- "6.4.2 However, reiterating the direction of DRP in the A.Y 2016-17, the Panel further observes that the Hon'ble ITAT while adjudicating on the issue for AY 2016-17 has merely relied on the valid ....
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....otal income reported in the P&L account by the assessee which is a very negligible amount for the company having income of 6,485,866 USD. Needless to mention that it has been laid down by various courts that for an entity to constitute a proper and genuine business concern, the expenses claimed are an important parameter to establish that the entity has a genuine business activity which is conspicuously missing in the case of the assessee. Thus, this clearly proves that the assessee company is a mere paper/sham entity incorporated merely for the purpose of obtaining Mauritius tax residency and consequential relief under India Mauritius DTAA. * Further, it is also seen that the assessee company is not having any employees and its sa....
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.... 13(4) of India-Mauritius DTAA as under:- "13. We have given a thoughtful consideration to the rival contentions and perused the materials on record. We have also applied our mind to the decisions relied upon by both sides. In our view, the core issue arising for consideration is taxability of capital gain on sale of shares under the treaty provisions. Therefore, at the very outset, we will proceed to address the issue from that perspective. 14. Undisputedly, the assessee is a tax resident of Mauritius holding a valid TRC and is engaged in the business as an investment holding company having a Category 1 global business licence issued by the competent authority in Mauritius. It is a fact on record that the assessee is in e....
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....o treaty benefits. 16. This, in our view, is against the spirit of CBDT Circular no. 789, dated April 13, 2000 and the ratio laid down by the Hon'ble Supreme Court in case Union of India Vs. Azadi Bachao Andolan (supra). In a recent decision of Hon'ble Jurisdictional High Court in case of Blackstone Capital Partners (Singapore) VI FDI Three PTE. Ltd. (supra), it has been held that once the assessee holds a valid TRC, the Departmental Authorities cannot go behind it to question residential status. Though, the Assessing Officer referred to certain observations of the Hon'ble Supreme Court in case of Vodafone International Holdings B.V. Vs. Union of India [2012] 17 taxmann.com 202 (SC), however, no material has been brought on record ....
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....ies carried on by the assessee, i.e., investment in shares of Indian companies. Thus, in the aforesaid view of the matter, we hold that the assessee is entitled to claim exemption under Article 13(4) of the tax treaty qua the capital gain arising on sale of shares. Therefore, the amount in dispute is not taxable in India. Ground no. 4 is allowed." [Emphasized by us] 7. Since, the issue has been already considered and decided by the Coordinate Bench in assessee's own case in preceding assessment year and no material is placed before us to controvert findings of the Tribunal, we see no reason to take a different view. The addition made by AO is thus, directed to be deleted for parity of reasons. Hence, the assessee succeeds on ground no....