The Tax Publishers2020 TaxPub(DT) 1280 (Mum-AAR) INCOME TAX ACT, 1961
Section 9(1), 90(2)
As assesse was incorporated in Mauritius and held a valid TRC issued by Mauritius Revenue Authority, therefore , assesse was a tax resident of Mauritius in terms of Article 4 of the DTAA between India and Mauritius ('Indo-Mauritian DTAA') and was entitled to be governed by beneficial DTAA i.e. Article 13(4) which provides that capital gains derived by a 'resident' of a contracting state from alienation of property other than those mentioned in paragraphs 1, 2 and 3 of the Article would be taxable in that contracting state. Hence, there could be no taxability in india of gain arising to assessee from sale of shares held as capital assest in India.
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Income deemed to accrue or arise in India - Income arising to non-resident assessee through transfer of capital asset situated in India - Non-resident being tax resident of Mauritius in terms of Article 4 of DTAA between India and Mauritius - Appilicability of beneficial provisions of DTAA
Question for consideration was as to whether gain arising from transaction of sale of shares, to be effected pursuant to Share Purchase Agreement dated 1-3-2011, held by Mauritian assessee in Mumbai International Airport Private Limited would be liable to tax in India having regard to the provisions of Article 13(4) of India-Mauritius Double Taxation Avoidance Agreement. Held: As per section 9(1), any income arising to non-resident assessee through transfer of capital asset situated in India would be deemed to accrue or arise in India and chargeable to tax as per the provisions of the Act in the hands of non-resident assessee. In the instant case, shares of MIAL, sold by applicant to GAHPL, was a capital asset of assessee in India and accordingly, any gains arising to assessee from sale of such shares would be considered as income accruing or arising in the hands of assessee and chargeable to tax as capital gains.However, section 90(2) on the other hand provides that where Government of India has entered into an agreement with Government of any country outside India for avoidance of double taxation, then, in relation to assessee to whom such agreement applies, provisions of the agreement/treaty to the extent they are more beneficial to that assessee would apply. As assesse was incorporated in Mauritius and held a valid TRC issued by Mauritius Revenue Authority, therefore , assesse was a tax resident of Mauritius in terms of Article 4 of the DTAA between India and Mauritius ('Indo-Mauritian DTAA') and was entitled to be governed by beneficial DTAA i.e. Article 13(4) which provides that capital gains derived by a 'resident' of a contracting state from alienation of property other than those mentioned in paragraphs 1, 2 and 3 of the Article would be taxable in that contracting state. Hence, there could be no taxability in india.
REFERRED :
FAVOUR : in assessee's favour
A.Y. :
IN THE AUTHORITY FOR ADVANCE RULINGS, MUMBAI BENCH
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