THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -3 vs. SARVA CAPITAL LLC

ITA - 440 / 2024HC Delhi14 August 20242 pages

For Petitioner: RUCHIR BHATIA

AI SummaryPartly Allowed

What did the High Court hold?

The Delhi High Court admitted the appeal on the question of law concerning the availability of DTAA benefits to the assessee. The court framed the issue as whether the Tribunal erred in holding that treaty benefits are available, considering the revenue's argument that the assessee's arrangement amounted to tax avoidance through treaty shopping. The court did not decide the merits of the appeal at this stage but admitted it for further consideration on the stated question of law. The appeal is listed for further hearing on 30.09.2024. No finding on the substantive issue has been recorded by the High Court as it is at the admission stage.

What were the facts?

The Commissioner of Income Tax (International Taxation)-3, the appellant, has filed an appeal against an order of the Income Tax Appellate Tribunal (Tribunal). The appeal pertains to the assessee, Sarva Capital LLC, and concerns Assessment Year 2019-20. The appellant seeks to challenge the Tribunal's decision, which is stated to have followed its prior ruling in ITA 34/2024. The present appeal was admitted by the Delhi High Court on 18 January 2024. The appellant also sought condonation for a 6-day delay in refiling the appeal, which was allowed.

What were the issues?

1. Whether the Tribunal has erred in law and in fact by holding that the treaty benefits under the Double Taxation Avoidance Agreement (DTAA) are available to the assessee, ignoring that the scheme of arrangement employed by the assessee is a tax avoidance through a treaty shopping mechanism? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The revenue contends that the Tribunal erred in allowing treaty benefits to the assessee. The revenue argues that the arrangement employed by the assessee constitutes tax avoidance through a treaty shopping mechanism, implying that the assessee is not genuinely entitled to the benefits under the DTAA.

AI-generated summary — verify with the full judgment below

$~65 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 440/2024 THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -3 .....Appellant Through: Mr. Ruchir Bhatia, SSC with Mr. Pratyaksh Gupta, JSC. versus SARVA CAPITAL LLC .....Respondent Through: Ms. Poonita Harsh Kundra, Mr. Aniket D. Agrawal, Mr. Samarth Chaudhari, Advocates. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA O R D E R %

14.08.2024 CM APPL. 46790/2024 (6 Days Delay in Refiling) 1. Bearing in the mind the disclosures made, the delay of 6 days in refiling the appeal is condoned. 2. The application shall stand disposed of. ITA 440/2024 3. Mr. Bhatia, learned counsel for the appellant has drawn our attention to the order passed in ITA 34/2024, and which pertains to Assessment Year [“AY”] 2019-20. The said appeal has been admitted in terms of our order dated 18 January 2024. 4. Since in the present matter the Income Tax Appellate Tribunal [“Tribunal”] has essentially followed its decision rendered for the aforenoted AY, we admit this appeal on the following questions of law: This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:04:35

A. Whether the Tribunal has erred in law and in fact by holding that the treaty benefits under Double Taxation Avoidance Agreement [“DTAA”] are available to the assessee, ignoring that the scheme of arrangement employed by assessee is a tax avoidance through treaty shopping mechanism” 5. The appeal be called again on 30.09.2024. YASHWANT VARMA, J. RAVINDER DUDEJA, J. AUGUST 14, 2024/ib This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:04:35

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