Home Case Index All Cases Income Tax Income Tax + AAR Income Tax - 2010 (3) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (3) TMI 106 - AAR - Income TaxIndia-Mauritius DTAA - Permanent Establishment (‘PE’) in India as defined in Article 5 - E*TRADE Mauritius Limited – Non resident applicant - The Applicant held equity shares in IL&FS Investsmart Limited (‘Indian Company’) which are listed on Stock Exchange in India. The Applicant had acquired these shares in the years 2005, 2006 and 2007. The shares were acquired by way of direct purchases as well as upon conversion of the Global Depository Receipts (“GDRs”) as per the details set out in Exhibit ‘A’. The Applicant has transferred 30,625,692 shares in the Indian Company to HSBC Violet Investment (Mauritius) Limited, a company organized under the laws of Mauritius, at Rs.200/- per share on 29th September 2008 and realized long term capital gains there-on in India. A Share Purchase Agreement was entered into on 16th May, 2008 By virtue of Article 13.4 of India-Mauritius DTAA, capital gain tax is not liable to be charged in India. We find no justification to accept the Revenue’s contention that the advance ruling should be refused at this stage as further inquiries might unravel some incriminating facts. Though it looks odd that the Indian tax authorities are not in a position to levy the capital gains tax on the transfer of shares in an Indian company, this is an inevitable effect of the peculiar provision in India-Mauritius DTAA, the Circular issued by CBDT and the law laid down by Supreme Court in Azadi Bachao case. Whether the policy considerations underlying the crucial Treaty provisions and the spirit of the Circular issued by the CBDT would still be relevant and expedient in the present day fiscal scenario is a debatable point and it is not for us to express any view in this behalf.
|