360 ONE OPPORTUNITIES FUND 10,MAURITIUS vs. ACIT, CIRCLE INTERNATIONAL TAX 1(1)(1), DELHI

ITITA 150/DEL/2026Status: DisposedITAT Delhi29 September 2026AY 2023-2416 pages
AI SummaryRemanded

What were the facts?

The assessee, 360 One Opportunities Fund, a Mauritius-based company, appealed against the assessment order dated 06.01.2026, passed by the ACIT, Circle International Tax 1(1)(1), Delhi, for Assessment Year 2023-24. The appeal followed directions from the Dispute Resolution Panel (DRP) dated 30.12.2025. The assessee, a Category 1 Global Business Company, invested in Indian mutual fund units and claimed capital gains of INR 17,01,57,392 on redemption as exempt under Article 13(4) of the India-Mauritius DTAA. The Assessing Officer (AO) and DRP held these gains taxable in India under Article 13(3A) of the DTAA, considering mutual fund units akin to shares. The assessee also disputed interest levied under section 234B.

What did the Tribunal hold?

The Tribunal set aside the issue of treaty eligibility and taxability of gains from the sale of mutual fund units to the AO for fresh adjudication. The Tribunal noted that the DRP had already considered the issue of substance requirements and regulatory compliance for treaty benefits. However, the Revenue's reliance on additional materials and the Supreme Court's decision in Tiger Global necessitated further examination. The Tribunal emphasized the principle of natural justice, requiring the assessee to be given an effective opportunity to rebut the factual propositions, documents, legal provisions, GAAR applicability, alleged tax-avoidance arrangements, and absence of commercial substance raised by the Revenue. The AO was directed to provide an adequate opportunity to the assessee to explain its position. The issue of interest under section 234B was not explicitly decided, but the overall appeal was allowed for statistical purposes, implying a remand for re-adjudication of the primary issue.

What were the issues?

1. Whether the capital gains of Rs. 12,76,18,044 earned on redemption of mutual fund units are exempt from tax in India under Article 13(4) of the India-Mauritius DTAA, or taxable under Article 13(3A) as capital gains derived from the sale of shares, as contended by the Revenue. The assessee argued that mutual fund units are not shares of a company and thus fall under Article 13(4), relying on the definition of 'company' in Article 3 and the nature of mutual funds as trusts under SEBI regulations. The Revenue contended that the intent of the DTAA amendment was to cover equity investments broadly, irrespective of the instrument used, and that mutual fund units are functionally similar to shares for treaty purposes. 2. Whether interest of Rs.43,39,012 levied under section 234B of the Act is correctly levied. The judgment does not record specific arguments from either side on this issue, beyond its inclusion as a ground of appeal.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI

Before: SH. KAVITHA RAJAGOPAL & SH. NAVEEN CHANDRA

For Appellant: Shri Ajay Vohra, Sr. Adv, Shri Samarth Chaudhari, Adv. and Shri Gourav, C.A
For Respondent: Dr. Shalini Verma, CIT-D.R
Hearing: 02.07.2026Pronounced: 29.09.2026

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

The above captioned appeal is preferred by the assessee against the assessment order dated 06.01.2026, passed by Income Tax Department, Office of the Assistant Commissioner of Income Tax, Circle – International Tax 1(1)(1), Delhi (hereinafter referred to as ‘ld. AO), under section 143(3)/144C(13) of the Income Tax Act, 1961

IT(IT)A No. 150/DEL/2026 [A.Y 2023-24] 360 One Opportunities Fund vs ACIT (hereinafter ‘the Act’) in pursuance of directions of the ld. Dispute Resolution Panel-2, New Delhi (in short ‘ld. DRP') dated 30.12.2025

The order continues below.

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