Case Law Details
Barclays Capital Mauritius Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that in terms of the provisions of the applicable tax treaty, i.e., Indo-Mauritius tax treaty, and as the provisions of the applicable tax treaty, being more beneficial to the assessee, override the provisions of the domestic law, the taxability of the dividends on the IDRs fails.
Facts-
The assessee is a tax resident of Mauritius. The assessee is registered with Securities and Exchange Board of India (SEBI) as Foreign Institutional Investor (FII). The assessee is carrying on investment activities in Indian capital market.
The assessee filed its ROI for the impugned AY declaring total income as Nil. The assessee claim carry forward of STCG of Rs.545,37,91,785/- and LTCG of Rs.11,62,361/-. It was submitted that the assessee had earned dividend income amounting to Rs.3,37,04,020/- in respect of shares represented by Indian Depository Receipts(IDR) issued by Standard Chartered Bank Plc. (SC Plc) incorporated in United Kingdom. The said IDRs are listed on Stock Exchange in India. The dividend has been received by overseas custodian bank in UK and ultimately remitted to all IDR holders (including assessee). An IDR has been recognized as a security to facilitate trading thereof on the Indian Stock Exchange. The dividend that an IDR holder receives, is in fact a dividend on the shares of SC Plc (a foreign company). Thus, the dividend cannot be regarded as income from the IDR.
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