Case Law Details
Sapein Funds Ltd. Vs CIT (ITAT Delhi)
ITAT Delhi held that Tax Residency Certificate (TRC) is statutorily the only evidence required to be eligible for the benefit under the DTAA. Accordingly, benefit of India-Mauritius DTAA duly available.
Facts- Sapien Funds Limited (SFL) is incorporated and registered outside India according to the law of Mauritius with a permanent establishment in Mauritius and a Tax Residency in Mauritius, the Tax Residence Certificate in this regard has been provided to IT authorities in India. SFL is an independent and distinct corporate legal entity. SFL is managed by Sapien Capital (Mauritius) Limited (SCML). SCML, as well as its directors, are tax residents of Mauritius.
The assessee company is created under Collective Investment Scheme. Collective investment vehicles (CIVs) generally do not meet the definition of “liable to tax” in order to qualify as a resident of a contracting state for the purposes of tax treaties. As a general rule, domestic tax laws in several countries treat the income and gains of CIV as arising directly from the investors and not from CIV itself. In short, the CIV is treated like a transparent entity. As a result, CIV is not entitled to the benefits of tax treaties.
It was held that the assessee company is not entitled to avail benefits under the India-Mauritius DTAA being not a resident for tax purposes because of non-fulfillment of condition of “liable to tax” criteria.
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