Non-Residents are allowed to toggle between the DTAA and the Income tax Act, whichever is beneficial to them

Court: Mumbai bench of the Income Tax Appellate Tribunal

Citation: Flagship Indian Investment Company (Mauritius) Limited (2010-TII-93-ITAT-MUM-INTL)

Brief: Ruling  allows the non-resident assessees to toggle between the DTAA and the Act. The logic of the decision is also in consonance with the provisions of the section 90(2) of the Act which allows the non-residents to be governed by the provisions of the DTAA or Act, whichever is beneficial to them.

Facts: Flagship Indian Investment Company (Mauritius) Limited (‘assessee’) was incorporated and a tax resident of Mauritius. The assessee was registered with the Securities Exchange Board of India (‘SEBI’) as a sub-account of JP Morgan Fleming Asset Management, which was registered with the SEBI as a Foreign Institutional Investor. The return was filed declaring total income at `Nil for the Assessment Year 2005-06 after claiming capital gains tax exemption in terms of Article 13 of Double Tax Avoidance Agreement between India and Mauritius (‘DTAA’).

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