DCIT, CIRCLE 1(1)(2), INTERNATIONAL TAXATION, NEW DELHI vs. BATTERY VENTURES VII (MAURITIUS), MAURITIUS

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ITA 1937/DEL/2023Status: DisposedITAT Delhi28 December 2023AY 2017-18Bench: Sh. C. N. Prasad, Judicial Member Dr. B. R. R. Kumar (Accountant Member)3 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee, being a Mauritius resident, is entitled to the benefits of the India-Mauritius DTAA. As per Article 13(4) of the DTAA, gains from the transfer of shares of Indian companies are taxable only in Mauritius.

What were the facts?

The assessee, a Mauritius-based company, sold shares of an Indian company and claimed benefits under the India-Mauritius DTAA. The Assessing Officer (AO) accepted that the assessee was entitled to DTAA benefits and that capital gains were taxable only in Mauritius.

What were the issues?

Whether the assessee is entitled to benefits under the India-Mauritius DTAA for capital gains arising from the sale of Indian company shares. Whether capital gains on the transfer of shares of Indian companies by a Mauritius resident are taxable in India.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

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

Before: Sh. C. N. PrasadDr. B. R. R. Kumar

For Appellant: Dr. Shashwat Bajpai, Adv. &
Hearing: 26.12.2023Pronounced: 28.12.2023

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the Revenue against the order dated 28.02.2020 passed by the AO u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961.

2.

Following grounds have been raised by the Revenue:

“(i) Whether on the facts and circumstances of the case and in law, ld. CIT(A) erred in holding that assessee has under reported the sale consideration on account of sale of capital asset. (ii) The ld. CIT(A) has failed to appreciate that assessee has under reported and misreported the income amounting to Rs.24,08,80,362/- on account of transfer of capital assets and the penalty proceedings has to be levied on the assessee.”

Battery Ventures VII (Mauritius) 3. Heard the arguments of both the parties and perused the material available on record.

4.

The assessee is a limited liability company incorporated in Mauritius and it had submitted the copy of the tax residency certificates issued by the Mauritius Tax Authorities for the relevant period during the course of the assessment proceedings. As per paragraph 4 of Article 13 of the DTAA between India and Mauritius applicable to the FY 2016-17, any Mauritius resident deriving any income by way of gains from transfer of shares of Indian companies should be liable to capital gains tax only in Mauritius and not in India.

5.

It is therefore, held that the assessee is entitled to the benefits of the DTAA between India and Mauritius, and thus being a Mauritius resident deriving income by way of gains from transfer of shares of Indian companies, it is liable to capital gains tax only in Mauritius and not in India as per paragraph 4 of Article 13 of the DTAA between India and Mauritius. It is also a fact on record that the AO both in the assessment order as well as remand report, has accepted that the assessee is entitled to the benefits of the India-Mauritius tax treaty and the capital gains is taxable in Mauritius.

6.

Keeping in view the facts on record and the order of the ld. CIT(A), we hold that the appeal of the Revenue is liable to be dismissed summarily.

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