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2017 (12) TMI 520 - AT - Income TaxEntitlement to treaty protection by an entity based on UAE - whether assessee covered by definition of “resident of Contracting State” under Article 4(1) of the Indo-UAE Tax Treaty - Held that:- In order to invoke Article 29, what is to be established is that if the assessee company was not to be formed in the UAE, the assessee would not have been entitled for such benefits. We have noted that the entire share capital of the assessee company is held by German entities by the name of Martrade Shipping + Transport GMBH and C.R. Consulting & Holding GMBH, but then, in the Indo-German DTAA also similar treaty protection with regard to taxability of shipping profits only in the state of residents are available. Therefore, whether the company was to be formed in UAE or in Germany, it would not have any material difference so far as non-taxability of said income in India is concerned. As corollary to this legal position, merely because the company is set up in UAE and not in the country to which the capital belongs, the assessee does not get any benefits of the Indo-UAE agreement which would have been otherwise available. The requirement necessary for invoking Article 29 is thus not fulfilled in the present case. Following the co-ordinate bench decision in the case of MUR Shipping DMC Co. (2015 (10) TMI 2374 - ITAT RAJKOT ), we reject the grievances of the Assessing Officer on this count also. As regards the wordings of the Tax Residency Certificate, based on which the Assessing Officer has concluded that the company was formed only for the purpose of availing Indo-UAE tax treaty benefits, we may mention that neither the inference of the Assessing Officer is based on any legally sustainable material or even common sense, nor this Tax Residency Certificate is relevant in any way. There is no dispute that the assessee was liable to tax in UAE by the virtue of incorporation in UAE and therefore, the assessee was covered by definition of “resident of Contracting State” under Article 4(1) of the Indo-UAE Tax Treaty.
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