“ treaty benefits ”

India Vs. Azadi Bachao Andolan 263 ITR 706 (SC); and Vodafone International Holdings B.V v. Union of India

A citizen is free to carry on business within the law, and mere tax planning without a motive to evade taxes through colorable devices is not frowned upon. The liability to taxation, for the purpose of tax treaty application, is a legal situation, not the fiscal fact of actual payment.

341 ITR 1 · 2012 · Supreme Court

295

(i) Formula One World Championship Ltd. v. CIT

Legitimate tax planning is permissible, allowing taxpayers to arrange their affairs to minimize tax liabilities while respecting the "look at test" for transaction genuineness and the separate entity principle in corporate taxation. The source of funds for treaty-beneficial structures does not automatically invalidate the transaction.

394 ITR 80 · 2017 · Supreme Court

200

DIT v. Guy Carpenter & Co Ltd.

This case provides foundational principles that illuminate the contours of the concept of 'Permanent Establishment' (PE) under tax treaties, especially regarding a 'fixed place' PE.

346 ITR 504 · 2012 · High Court

171

CIT v. P.V.A.L. Kulandagan Chettiar

For fees for technical services to be taxable under a tax treaty's 'make available' clause, a transfer of technology enabling the recipient to independently perform the service in the future is necessary, beyond mere service rendition. The case also clarifies that re-insurance services do not constitute 'imparting' of information taxable as royalty.

267 ITR 654 · 2004 · Supreme Court

(5)) 3.12. DCIT v. Patni Computer Systems Ltd.

This case established a principle regarding the application of Double Taxation Avoidance Agreements (DTAAs) versus domestic tax law, particularly concerning the use of more beneficial provisions for an assessee, though its specific impact has been nullified by subsequent legal amendments.

114 ITD 159 · 2008 · ITAT

Sanofi Pasteur Holding SA v. Department of Revenue

An assessee has the option to choose between the provisions of the Income-tax Act and a Double Taxation Avoidance Agreement (DTAA) in any given year, and the non-election of DTAA benefits in one year does not prevent claiming them in subsequent years.

354 ITR 316 · 2013 · High Court

Invensys Systems Inc. v. DIT

Gains from the indirect transfer of shares in a foreign company holding Indian shares are not taxable in India under the relevant tax treaty, which is considered a self-contained code to be interpreted plainly. Creating corporate structures or special purpose vehicles for investment to secure tax benefits is a legitimate business activity.

323 ITR 184 · 2010 · Reported

ITA 740/CHNY/2023[2013-14]Status: DisposedITAT Chennai29 Feb 2024AY 2013-14

Payments for services are not taxable as fees for technical services (FTS) under a Double Taxation Avoidance Agreement (DTAA) if the services do not 'make available' any technical knowledge, know-how, or expertise to the recipient in India.

Judgments citing treaty benefits

DCIT, Intnl Taxn Circle-2(2), Chennai vs. M/S Worldpart Ltd., Nicosia

In the result, the appeals of the revenue stand dismissed

Bench: Shri V. Durga Rao & Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A. Nos.740 & 741/Chny/2023 िनधा"रण वष"/Assessment Years: 2013-14 & 2014-15 The Deputy Commissioner Of Vs. M/S. Worldpart Limited, Income Tax, International Taxation 3, Julia House, Themistocles Dervis, Circle 2(2), Chennai. Nicosia 106600, Foreign Cyprus Represented By: M/S. K M Mohandass & Co., No. 36, 1St Street, Sait Colony, Egmore, Chennai 600 008. [Pan:Aaacw9185B] (अपीलाथ" /Appellant) (""थ"/Respondent) आयकर अपील सं./I.T.A. Nos.758, 759 & 760/Chny/2023 िनधा"रण वष"/Assessment Years: 2013-14, 2014-15 & 2015-16 M/S. World Part Limited, Vs. The Deputy Commissioner Of C/O B S R & Company, 9Th Floor, Income Tax, International Taxation Business Plaza, Westin Hotel Circle 2(2), Chennai. Campus, 36/3-B Koregaon Park Annex, Mundhwa Road, Ghorpadi, Pune, Maharashtra 411 001. (अपीलाथ" /Appellant) (""थ"/Respondent) Department By : Shri Clement Ramesh Kumar, Cit Assessee By Shri R. Sivaraman, Advocate : सुनवाई की तारीख/ Date Of Hearing 23.01.2024 : घोषणा की तारीख /Date Of Pronouncement : 29.02.2024 आदेश /O R D E R Per V. Durga Rao:

For Respondent: Shri Clement Ramesh Kumar, CIT

Section 143(3)Section 147

same read as under: -  Residency of real owners of Income is not established, as it is a consortium formed to take advantage of the Treaty benefits, 'the Income of Rs.22,89,76,090/- is taxed at MMR.  World Part Ltd is incorporated with no definite business purposes laid down ... above definition, it is clear that Assessee is not the beneficial owner. Therefore, the Consortium formed only to take advantage of the treaty benefits, hence it is prayed that appeal of Department to be allowed. 9 I.T.A. Nos.740-741 & 758-760/Chny/23 However, the fact that the issue is squarely covered

Abu Dhabi Investment Authority, Mumbai vs. The Deputy Commissioner of Income Tax (Internaitonal Taxation)-Circle 1(1)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 3415/MUM/2023[2019-20]Status: DisposedITAT Mumbai26 Feb 2024AY 2019-20

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI AMARJIT SINGH (Accountant Member)

Section 143(1)Section 154Section 24

that the Appellant is a 'Government within the meaning of Article 24(2) of the DTAA between India and UAE and therefore, eligible for treaty benefits in respect of its entire income earned in India under Article 24(1) of the said treaty; b) Disregarding the fact that the Appellant ... Appellant as a private assessee, as against Government as defined under Article 24 of the DTAA between India and UAE and determining the treaty benefits considering it as a private company with respect to the income earned in India. The Appellant prays that the claim of the Appellant be allowed

Sarva Capital Llc, New Delhi vs. ACIT Circle International Tax 3(1)(2), New Delhi

In the result, appeal is partly allowed

ITA 2073/DEL/2023[2020-21]Status: DisposedITAT Delhi05 Feb 2024AY 2020-21

Bench: Shri Kul Bharat & Dr. B. R. R. Kumar

For Appellant: Sh. Nirbhay Mehta, AdvFor Respondent: Sh. Vizay B.Vasanta, CIT-DR

Section 112Section 143(2)Section 143(3)Section 144C(13)Section 270A

Department in assessment orders passed u/s 143(3) of the Act for AY 2016-17 and AY 2017-18. 5.1 That while denying the treaty benefits to the Appellant, the Ld. AO by following the directions of DRP, was not justified in holding as under :- (i) The scheme of arrangement ... Article 13(3B)/Article 13(4) of India-Mauritius DTAA. While doing so, he ultimately concluded that the assessee is not entitled for Treaty benefits due to the following reasons : “1. The scheme of arrangement employed by the assessee is a tax avoidance through treaty shopping mechanism. 5 Sarva Capital

M/S. Exl Service.Com Llc, Mumbai vs. ADIT, New Delhi

In the result, the appeals of the assessee in ITA Nos

ITA 5628/DEL/2014[2005-06]Status: DisposedITAT Delhi20 Dec 2023AY 2005-06

Bench: Shri N.K. Billaiya & Ms Astha Chandra

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT-DR

ITA 5627/DEL/2014[2004-05]Status: DisposedITAT Delhi20 Dec 2023AY 2004-05

above facts, we are of the considered view that since the assessee is a company resident in USA, it is entitled to treaty benefits under India - US Tax Treaty. Article 7 of the India US Tax Treaty dealing with taxation of “business profits” is as under: “ARTICLE 7: Business profits

M/S. Exl Service.Com Llc, Mumbai vs. ADIT, New Delhi

In the result, the appeals of the assessee in ITA Nos

Bench: Shri N.K. Billaiya & Ms Astha Chandra

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT-DR

ITA 4989/DEL/2014[2005-06]Status: DisposedITAT Delhi20 Dec 2023AY 2005-06

ADIT, New Delhi vs. M/S. Exl Service.Com Inc, Usa

In the result, the appeals of the assessee in ITA Nos

Bench: Shri N.K. Billaiya & Ms Astha Chandra

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT-DR

ITA 3408/DEL/2014[2006-07]Status: DisposedITAT Delhi20 Dec 2023AY 2006-07

M/S. Exl Service.Com Llc, Mumbai vs. ADIT, New Delhi

In the result, the appeals of the assessee in ITA Nos

Bench: Shri N.K. Billaiya & Ms Astha Chandra

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT-DR

ITA 4183/DEL/2013[2003-04]Status: DisposedITAT Delhi20 Dec 2023AY 2003-04

Exl Service.Com Inc, Mumbai vs. Addl. DIT Int. Taxation, New Delhi

In the result, the appeals of the assessee in ITA Nos

Bench: Shri N.K. Billaiya & Ms Astha Chandra

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT-DR

ITA 4600/MUM/2017[2012-13]Status: DisposedITAT Mumbai21 Nov 2023AY 2012-13

ACIT 16(1), Mumbai vs. 9X Media P.Ltd, Mumbai

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri Ashok Rao, CAFor Respondent: Ms. Riddhi Mishra, CIT DR

ITA 3606/MUM/2017[2012-13]Status: DisposedITAT Mumbai21 Nov 2023AY 2012-13

view, would not preclude the Income Tax Department from denying Treaty Shopping or Treaty Abusal Doctrine: (para 98 of the order): the tax treaty benefits, if it is established, on facts, that the Mauritius company has been interposed as the owner of the shares in India, at the time

9X Media P.Ltd, Mumbai vs. Asst CIT 16(1), Mumbai

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri Ashok Rao, CAFor Respondent: Ms. Riddhi Mishra, CIT DR

ITA 7477/MUM/2016[2011-12]Status: DisposedITAT Mumbai21 Nov 2023AY 2011-12

ACIT 16(1), Mumbai vs. 9X Media P.Ltd, Mumbai

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri Ashok Rao, CAFor Respondent: Ms. Riddhi Mishra, CIT DR

ITA 7052/MUM/2016[2011-12]Status: DisposedITAT Mumbai21 Nov 2023AY 2011-12

9X Media P.Ltd, Mumbai vs. JCIT RG 11(1), Mumbai

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Shri Ashok Rao, CAFor Respondent: Ms. Riddhi Mishra, CIT DR

ITA 382/DEL/2023[2016-17]Status: DisposedITAT Delhi21 Nov 2023AY 2016-17

Cpi India I Limited, Mumbai vs. ACIT, Int.Tax. Circle-1(2)(1), Delhi

In the result, the appeal is partly allowed, as indicated

Bench: Shri G.S. Pannu, Vice- & Shri Saktijit Dey, Vice-Assessment Year: 2016-17 . Cpi India Ltd., Vs. Acit, C/O- Vasa Chauhan & International Taxation, Associates Off. No. 41, Circle -1(2)1), 3Rd Floor, High Life Premises, Delhi P.M. Road, Santacruz West, Mumbai Pan :Aadcc1505G (Appellant) (Respondent)

Section 112(1)(c)Section 144C(13)Section 147Section 148Section 48Section 48(1)

exemption under Article 13(4) of India – Mauritius Double Taxation Avoidance Agreement (DTAA) on the reasoning that the assessee is not entitled to treaty benefits, as it is mere a paper company created in Mauritius to avail treaty benefits. Thus, after allowing unabsorbed long-term capital loss pertaining to assessment ... Without prejudice, learned counsel submitted, the assessee, being a tax resident of Mauritius holding a valid TRC is entitled to treaty benefits. He submitted, there is not disputed between the parties that the shares, sales of which, resulted in capital gain were purchased by the assessee prior to 01.04.2017. Thus

Sapien Funds Ltd, Mauritius vs. CIT(International Taxation), New Delhi

In the result, appeal of the assessee is allowed

ITA 2890/DEL/2022[2018-19]Status: DisposedITAT Delhi21 Nov 2023AY 2018-19

Bench: Shri Challa Nagendra Prasada N D Shri M. Balaganesh

For Appellant: Advocate

Section 143(3)Section 263

their position on this issue bi lateral ly either by express provision in the tax treaties by stating that CIV is entitled to tax treaty benefits or through exchange of notes. In the absence of such action, the CIV would not be entitled to benefits of tax treaties. Accordingly ... provisions of the said I.T.A. No. 2890/Del/2022 Convention, shal l be given effect to in the Union of India.” Under a Tax Treaty framework, treaty benefits are extended only to the tax residents of the contracting states. However, treaty abuse may occur when a taxpayer resident of a third country

Veg 'N' Table, Noida vs. DCIT, Circle- Int. Tax 3(1)(1), Delhi

In the result, the appeal is allowed, as indicated above

ITA 2251/DEL/2022[2018-19]Status: DisposedITAT Delhi31 Oct 2023AY 2018-19

Bench: Shri Saktijit Dey, Vice- & Dr. B.R.R. Kumarassessment Year: 2018-19 . Veg ‘N’ Table, Vs. Dcit, 801, Tower-A 1, Circle- International Tax - Ansal Corporate Park, 3(1)(1), Sector-142, Delhi Noida Pan :Aagcv2131A (Appellant) (Respondent)

ITA 1815/DEL/2023[2020-21]Status: HeardITAT Delhi26 Oct 2023AY 2020-21

Officer ultimately held that, though, the assessee was having a valid TRC, however, neither it can be treated as tax resident of Mauritius nor treaty benefit can be allowed to the assessee, reasons being: 1. The scheme of arrangement employed by the assessee is one of tax avoidance through treaty ... Mauritius. 6. Thus, in the aforesaid premises, he proceeded to tax the long-term capital gain at the hands of the assessee after denying treaty benefits. Out of the total consideration of Rs.2,81,94,834/-, 4 | P a g e AY: 2018-19 the Assessing Officer reduced the cost

Accion Africa-Asia Investment Company, Noida vs. ACIT International Taxation Circle 1(1)(1), New Delhi

In the result, the appeal is allowed, as indicated above

Bench: Shri Saktijit Dey, Vice- & Dr. B.R.R. Kumarassessment Year: 2020-21 . Accion Africa-Asia Vs. Acit, Investment Company, International Taxation, C/O- Ankul Goyal, Advocate Circle-1(1)(1), Azb & Partners, A-8, Sector-4, New Delhi Noida Pan :Aajca1104H (Appellant) (Respondent)

ITA 1686/DEL/2022[2018-19]Status: DisposedITAT Delhi23 Aug 2023AY 2018-19

Company are employees/directors of the SANNE GROUP in Mauritius, which provides directors to such companies, which are structured with the sole purpose of availing treaty benefits. He observed that control and management decisions of the company were vested with a non-resident of Mauritius, rather than director resident in Mauritius ... Assessing 3 | P a g e AY: 2020-21 Officer observed that the assessee is merely a paper company set up for availing treaty benefits. Accordingly, he issued a show- cause notice to the assessee to explain, why the exemption claimed under the treaty provisions should not be denied

The Golden State Capital Pte Ltd, Singapore vs. DCIT Circle 3(1)(1), International Taxation, Delhi

Bench: Shri Kul Bharat & Shri M. Balaganeshthe Golden State Capital Pte Ltd, Vs. Dcit, 31, Tanglin Road, #03,-04, St. Circle-3(1)(1), Regis Residences, Singapore, International Taxation, Singapore, Singapore, 247912 Delhi (Appellant) (Respondent) Pan: Aagct8026Q Assessee By : Shri Deepak Chopra, Adv Shri Anmol, Adv Shri Priya, Adv Revenue By: Shri Vizay B. Vasanta, Cit Dr Date Of Hearing 31/05/2023 Date Of Pronouncement 23/08/2023

For Appellant: Shri Deepak Chopra, AdvFor Respondent: Shri Vizay B. Vasanta, CIT DR

Section 143(3)Section 144C(13)Section 282A(1)

issued by Singapore Tax Authorities before the ld AO to prove the point that it is tax resident of Singapore and accordingly entitled for treaty benefits with Singapore. The ld AO held the Assessee ineligible for treaty benefit due to lack of commercial substance in Singapore. The name of Singapore ... concluded that the Assessee does not qualify as a resident of Singapore and consequentially held that it is not eligible for India- Singapore Treaty Benefit. 8. The ultimate contentions of the ld AO to deny the treaty benefits to the Assessee could be summarized as under:- The Golden State Capital

Saif 2-Se Investments Mauritius Ltd, New Delhi vs. ACIT, Circle International Taxation (3)(1)(2) Delhi, New Delhi

ITA 1812/DEL/2022[2018-19]Status: DisposedITAT Delhi14 Aug 2023AY 2018-19

Bench: Shri G.S. Pannu & Shri Saktijit Deyassessment Year: 2018-19

Section 10(34)Section 142(1)Section 143(3)Section 144C(13)

submitting that, being a tax resident of Mauritius holding a valid TRC, it is entitled to treaty benefits, however, the Assessing Officer remained unconvinced. He observed, though, assessee’s principal activity is to hold investments, however, assessee had held investment in only one company throughout its existence ... reasoning, the Assessing Officer ultimately held that the assessee cannot be treated as a tax resident of Mauritius, hence, would not be entitled to treaty benefits. Accordingly, he framed the draft assessment order. The assessee filed objections against the draft assessment order before learned DRP. In course of proceedings before

Leapfrog Financial Inclusion India (II) Ltd, Mauritius vs. ACIT, Circle 2(2)(1), International Taxation, New Delhi

ITA 366/DEL/2023[2020-21]Status: DisposedITAT Delhi11 Aug 2023AY 2020-21

Bench: Sh. G. S. Pannu & Sh. Saktijit Dey, Vice-Ita Nos.365 & 366/Del/2023 (Assessment Years : 2019-20 & 2020-21) & Stay Application No.85/Del/2023 (Assessment Year : 2020-21) Leapfrog Financial Vs. Acit Inclusion India (Ii) Ltd., Circle – 2(2)(1) 2Nd Floor, C/O Axis New Delhi Fiduciary Ltd., The Axis 26 Cybercity, Ebene, Mauritius - 72201 Pan No. Aaccl 8541 Q (Appellant) (Respondent) Assessee By Shri Deepak Chopra, Adv. Shri Anmol Anand, Adv. Ms. Priya Tandon, Adv. Revenue By Shri Vizay B. Vasanta, Cit-D.R. Date Of Hearing: 15.05.2023 Date Of Pronouncement: 11.08.2023

ITA 365/DEL/2023[2019-2]Status: DisposedITAT Delhi11 Aug 2023

basis. 5. Thus, the Assessing Officer held that the assessee has been interposed as an entity in Mauritius only for the purpose of deriving treaty benefits for the principal purpose of tax avoidance. Thus, he observed that applying the doctrine of substance over form it can be concluded that entire ... Counsel submitted, after codification of General Anti Avoidance Rules (GAAR) under Chapter XA of the Act. The choice of the tax payer to seek treaty benefit, in case it is more beneficial, has been limited by introduction of sub section (2A) to Section 90 of the Act, which overrides

Leapfrog Financial Inclusion India (II) Ltd, Mauritius vs. ACIT, Circle 2(2)(1), International Taxation, New Delhi