9911796707
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Issues Involved:
1. Entitlement to benefits under the Indo-Mauritius Double Taxation Avoidance Agreement (DTAA). 2. Taxability of dividends received by the applicant. 3. Tax exemption on interest received under Article 11 of the Treaty. 4. Taxability of capital gains from transfer of securities in Indian companies. 5. Permanent establishment status of the Indian advisor. 6. Taxability of other income, including income from units of mutual funds. Summary: Issue 1: Entitlement to Benefits under the Indo-Mauritius DTAA The applicant, a Mauritius-incorporated company, sought a ruling on whether it is entitled to benefits under the Indo-Mauritius DTAA. The Authority concluded that the applicant is a resident of Mauritius within the meaning of Article 4 of the Treaty, and thus entitled to the benefits under the Treaty. This conclusion was based on the applicant's compliance with Mauritius residency requirements and effective management being situated in Mauritius. Issue 2: Taxability of Dividends The applicant withdrew this question, as the Finance Act, 1997, abolished tax on dividends, making the issue of withholding tax irrelevant. The Authority refrained from ruling on this question. Issue 3: Tax Exemption on Interest Received The applicant sought to know if interest received under loan agreements approved by the RBI/Government would be exempt from tax under Article 11 of the Treaty. The Authority ruled that such interest will be exempt to the extent that Indian tax laws confer exemption or to the extent any such exemption is conferred by the Government. The ruling clarified that the exemption applies only if the transaction is specifically approved by the Government and subject to the limits of exemption provided under Indian tax laws. Issue 4: Taxability of Capital Gains The applicant inquired if it would be taxable in India on capital gains from the transfer of securities in Indian companies. The Authority ruled that such capital gains are not taxable in India under Article 13 of the DTAA. Issue 5: Permanent Establishment Status of the Indian Advisor The applicant withdrew this question, stating that arrangements regarding an Indian advisor had not been finalized. The Authority refrained from ruling on this question. Issue 6: Taxability of Other Income The applicant sought clarification on whether income from units of mutual funds in India, not expressly covered by other articles of the Treaty, would be taxable only in Mauritius. The Authority ruled that income derived from units of mutual funds will not be liable to tax in India under Article 22 of the DTAA. Rulings: 1. Entitled to benefits under the Treaty. 2. Question withdrawn; no ruling. 3. Interest exempt to the extent of Indian tax laws or Government approval. 4. Capital gains not taxable in India. 5. Question not pressed; no ruling. 6. Income from units of mutual funds not taxable in India.
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