CPI India I Ltd. Vs ACIT (ITAT Delhi)
Valid TRC suffices for DTAA benefit; vague allegations of being a shell company can’t override treaty protection- Long-term capital gains/losses on pre-2017 investments of a Mauritius resident are not taxable in India.
Assessee, a Mauritius-based investment holding company with a valid Tax Residency Certificate (TRC), reported a long-term capital loss of ₹51.87 crore on sale of unlisted shares of BPTP Ltd. and claimed exemption under Article 13(4) of the India–Mauritius DTAA.
AO & DRP rejected the claim, treating the company as a paper entity lacking real business substance and denied treaty benefits.
Before the Tribunal, the Assessee relied on its own favourable ITAT ruling for A.Y. 2016–17, where similar facts were accepted and DTAA relief was allowed.
Following that precedent, the Tribunal held that since the Assessee possessed a valid TRC, made genuine FDI investments prior to 07.04.2017, and no evidence of round-tripping existed, the capital loss is not taxable in India under Article 13(4).
Accordingly, the addition was deleted and the appeal partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against assessment order dated 31.01.2025 passed u/s. 147 r.w.s 144C(13) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), for assessment year 2018-19.
