Green Maiden A 2013 Trust Vs ACIT (ITAT Mumbai)
Conclusion: Addition made by AO in the hands of the trust was not justified as income from investments was taxable in the settlor’s hands and exempt under the India-UAE Double Taxation Avoidance Agreement (DTAA).
Held: Assessee earned income of Rs. 5,58,71,311 from investments in India, which AO taxed in the trust’s hands under Section 147, read with Section 144C (13). Assessee contended that the trust was revocable under Sections 61 and 63, as ADIA was both settlor and sole beneficiary with rights to reassume power over the assets. Thus, the income should be deemed as ADIA’s and exempt under Article 24 of the India-UAE DTAA. Assessee relied on the Bombay High Court’s decision in Abu Dhabi Investment Authority v. AAR (2021), which quashed an AAR ruling and held such income non-chargeable in India. Aggrieved by AO’s order, assessee appealed to Dispute Resolution Panel (DRP) directions. DRP upheld the AO’s action, leading to the final assessment. On appeal to ITAT. Assessee counsel highlighted the revocable nature of the trust and cited the Bombay High Court’s ruling, along with coordinate bench decisions in the assessee’s own case for AYs 2016-17 to 2018-19, where similar additions were deleted. It was held that the trust deed established revocability, making the income taxable in ADIA’s hands. The bench held the income non-chargeable in India. It also noted no change in facts or law from prior years where relief was granted by following the Bombay High Court’s findings that Sections 61-63 apply to foreign trusts and the DTAA exemption under Article 24.
