Case Law Details
Sarva Capital LLC Vs ACIT (ITAT Delhi)
ITAT Delhi held that as shares were acquired prior to 01.04.2017, gain derived from sale of such equity shares is exempt under Article 13(4) of India-Mauritius DTAA.
Facts- The assessee is a non-resident corporate entity incorporated under the laws of Mauritius and a tax resident of Mauritius. As stated by AO, the assessee was incorporated primarily for the purpose of making investments in India in education space, agriculture, healthcare, microfinance institutions and other financial services. In course of its business activities, the assessee had made investment in Indian companies by way of equity shares. In the year under consideration, the assessee had sold equity shares of two Indian companies, Sewa Gruh Rin Ltd. and Veritas Finance Pvt. Ltd. and derived income under the head ‘long-term capital gain’. In the original return of income filed for the impugned assessment year on 13.03.2020, though, the assessee offered the income derived from sale of equity shares as capital gain, however, claimed it as exempt in terms of Article 13(4) of the India-Mauritius DTAA.
Subsequently, on 13.03.2022, the assessee filed a revised return of income offering the long-term capital gain derived from sale of equity share of Veritas Finance Pvt. Ltd. under Article 13(3B) of India-Mauritius DTAA. In course of assessment proceedings, AO proceeded to examine assessee’s claim of benefit in terms of 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.
Having denied the Treaty benefits to the assessee, AO brought to tax the entire long-term capital gain under the provisions of domestic law and accordingly, completed the assessment.
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