TMI Blog2023 (8) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... t. TRC issued by an authority in the other tax jurisdiction is the most credible evidence to prove the residential status of an entity and the TRC cannot be doubted. In fact, the CBDT, specifically in the context of India Mauritius treaty, has issued Circular No. 682, dated 30th March, 1994 and 789, dated 14th April, 2000 clarifying that TRC issued by Mauritius Tax Authorities proves the residential status of a resident of Mauritius and no other evidence is required. In case of UOI Vs. Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT ] held that liable to taxation as used in Article 4 of India-Mauritius DTAA does not mean that merely because tax exemption under certain specified head of income including capital gain from sale of shares has been granted under the domestic tax laws of Mauritius, it can lead to the conclusion that the entities availing such exemption are not liable to taxation. The Hon ble Supreme Court categorically rejected Revenue s contention that avoidance of double taxation can arise only when tax is actually paid in one of the contracting States. Hon ble Court held that liable to taxation and actual payment of tax are two different aspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid Global Business Licence (Category 1) (GBL-1) issued by the Financial Service Commission in Mauritius. The assessee s holding companies are SAIF II Mauritius Company Ltd. ( SAIF II ), which owns 51% shareholding and SAIF III Mauritius Company Limited ( SAIF III ), which holds 49% shareholding in the assessee company. He has also noted that two of the directors of the assessee company are residents of Mauritius, whereas, two other directors are from Hongkong. 5. In the year under consideration, the assessee received dividend income of Rs. 47,64,37,500/- on equity shares of National Stock Exchange ( NSE ), whereas, it received net long term capital gain of Rs. 465,99,50,702/- on part disposal of equity shares of NSE. In the return of income filed for the assessment year under dispute, the assessee claimed the dividend income as exempt under section 10(34) of the Act. Whereas, he claimed the net long term capital gain to be exempt under Article 13(4) of India Mauritius tax treaty. 6. In course of assessment proceedings, the Assessing Officer, from time to time, issued statutory notices under section 142(1) and 143(2) of the Act calling for various informations. Each of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, would not be entitled to treaty benefits. Accordingly, he framed the draft assessment order. The assessee filed objections against the draft assessment order before learned DRP. In course of proceedings before learned DRP, the assessee furnished various additional evidences to establish its residential status as well as its claim of treaty benefits. Though, learned DRP admitted the additional evidences and called for a remand report of the Assessing Officer, however, ultimately, rejecting the objections, they upheld the decision of the Assessing Officer. In terms with the direction of learned DRP, the assessment was finalized. 8. Learned counsel appearing for the assessee submitted that the assessee was incorporated in Mauritius in the year 2008 and is in existence for over 15 years. He submitted, assessee s status as on date continues to be active in investment holding business even after sale of part of shares of NSE. He submitted, the assessee is not a fly by night operator, but has held the investments for a considerable length of period. He submitted, initially the investments in NSE shares were made by SAIF II, one of the holding companies of the assessee, in the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submitted, the allegations of the departmental authorities on the residential and business status of the assessee is wholly unsustainable. 11. Without prejudice, he submitted, the fact that the assessee has been incorporated in Mauritius and holding a valid TRC is beyond dispute. He submitted, under section 73(1)(b) of the Mauritius Income Tax Act, a company is said to be resident in Mauritius, if it satisfies either of the two conditions, i.e., the company is incorporated in Mauritius and has its central management and control in Mauritius. He submitted, in assessee s case, both the conditions are satisfied. He submitted, as per the provisions of Mauritius Financial Services Act, 2007, Category 1 GBL, per se, establishes that its control and management is in Mauritius. 12. Without prejudice, he submitted, as per the requirement of Mauritius Financial Services Act, the assessee is having two directors, who are residents of Mauritius, its principal bank account is in Mauritius, it maintains accounting records and preparing auditing financial statements in Mauritius. Therefore, the residential status of the assessee cannot be doubted or disputed. He submitted, the TRC and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of the assessee by Financial Services Commission, Mauritius on 16th January, 2009. Further, from the date of its incorporation, the Mauritius Revenue Authorities have issued TRCs in favour of the assessee. Even, in the impugned assessment year, the assessee holds a valid TRC. These facts are not disputed by the Assessing Officer. 16. It is further relevant to observe, assessee s holding company, viz., SAIF II, acquired 5% unlisted equity shares of NSE, being 22,50,000 shares at a price of USD 55.55 per share for a total consideration USD 125 million. At the time of acquisition of shares by SAIF II, the various regulatory authorities of the Government of India, such as, FIPB, SEBI, RBI, NSE India undertook due diligence with regard to the credentials of the assessee by verifying all the documents regarding the corporate structure of the company, beneficial ownership, financial structure and various other factors. While conducting the due diligence all necessary and relevant documents were examined, which clearly disclose the share holding pattern and structure of not only the assessee, but also assessee s holding companies and as also the holding company of SAIF II an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of shares by the assessee demonstrates the status of the assessee as a genuine entity carrying on the business in holding investment. It is now fairly well settled that TRC issued by an authority in the other tax jurisdiction is the most credible evidence to prove the residential status of an entity and the TRC cannot be doubted. In fact, the CBDT, specifically in the context of India Mauritius treaty, has issued Circular No. 682, dated 30th March, 1994 and 789, dated 14th April, 2000 clarifying that TRC issued by Mauritius Tax Authorities proves the residential status of a resident of Mauritius and no other evidence is required. In case of UOI Vs. Azadi Bachao Andolan (supra), the Hon ble Supreme Court has not only upheld the validity of the aforesaid CBDT Circulars, but has also held that liable to taxation as used in Article 4 of India-Mauritius DTAA does not mean that merely because tax exemption under certain specified head of income including capital gain from sale of shares has been granted under the domestic tax laws of Mauritius, it can lead to the conclusion that the entities availing such exemption are not liable to taxation. The Hon ble Supreme Court categorical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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