EMERGING INDIA FOCUS FUNDS,MAURITIUS vs. ACIT, CIRCLE INT. TAXATION 1(2)(2), DELHI

ITA 1963/DEL/2025Status: DisposedITAT Delhi25 June 2025AY 2022-2325 pages
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What did the Tribunal hold?

The Tribunal held that units of equity-oriented mutual funds are akin to equity shares and thus taxable under Article 13(3A) of the India-Mauritius DTAA, contrary to the assessee's claim of exemption under Article 13(4). However, it directed the AO to verify if any gains arose from mutual funds acquired before April 1, 2017, which would be exempt.

What were the facts?

The assessee, a foreign company resident in Mauritius, invested in Indian equity-oriented mutual funds and claimed capital gains as exempt under the India-Mauritius DTAA. The Assessing Officer (AO) held that gains from these mutual funds were taxable under Article 13(3A) of the DTAA, as the underlying assets were shares.

What were the issues?

Whether capital gains on the sale of equity-oriented mutual fund units by a Mauritian resident are taxable in India under the India-Mauritius DTAA, and if so, to what extent.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13)

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Income Tax Appellate Tribunal, DELHI BENCHES: D : NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL

For Appellant: Shri Ajay Vohra, Sr. Advocate;, Shri Krishan Malhotra, Advocate;, Shri Gaurav Sachdeva, Advocate; &, Ms Aditi Garg, CA
For Respondent: Shri Abhishek Sharma, CIT-DR
Hearing: 08.05.2025Pronounced: 25.06.2025

PER ANUBHAV SHARMA, JM:

This appeal is preferred by the assessee against the final assessment orders dated 23.01.2025 passed by the Asstt. Commissioner of Income Tax, Circle Int. Tax 1(2)(2), Delhi (hereinafter referred to as the Ld. AO) u/s 143(3) r.w.s.144C(13) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act') for assessment year 2022-23. 2. Heard and perused the records. On the basis of submissions and the material on record it comes up that assessee is a foreign company and a tax resident of Mauritius. The assess

The order continues below.

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