Case Law Details
The argument that unless the capital gain is actually taxed in Mauritius the DTAC would not apply in the context of section 90(1) and section 90(2) of the Act, though attractive, cannot be entertained in view of the decision in Union of India vs. Azadi Bachao Andolan. Even though capital gain is not actually taxed in Mauritius, the question raised is seen to be concluded by the decision in Union of India vs. Azadi Bachao Andolan. If it wants to, it is for the revenue to canvass the question before the Supreme Court. This Authority is bound by that decision. Here, the assets proposed to be transferred come under paragraph 4 of Article 13 of the DTAC between India and Mauritius. The applicant being a tax resident of Mauritius in the light of the tax residency certificate produced by it, going by the decision in Union of India vs. Azadi Bachao Andolan, it has to be held that the gain that may arise to the applicant is not chargeable to tax in India.
Since chapter X-A introduced into the Act by the Finance Act 2012 is to come into force only on 1.4.2013, section 90 (2A) of the Act has no relevance at this stage. Same is the position regarding section 90 (4) of the Act introduced. As and when they come into force, it will be open to the revenue to consider those aspects; notwithstanding this ruling. Capital gains from the proposed sale of shares in this case is not chargeable to tax in India in view of paragraph 4 of Article 13 of the India-Mauritius DTAC and on question number 2 that the buyer of the shares has no obligation to withhold taxes under section 195 of the Income-tax Act.
BEFORE THE AUTHORITY FOR ADVANCE RULINGS (INCOME TAX)
NEW DELHI
The 18th Day of July 2012
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