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Part C : Tribunal & AAR International Tax Decisions
19 2010 TII 66 ITAT-Del. Intl.
SMR Investment Limited v. DDIT
Article 13 of India-Mauritius DTAA
Dated : 26-3-2010
On facts, matter remanded to tax officer to determine place
of effective management of the company incorporated in Mauritius.
Facts :
The taxpayer, a company in Mauritius (Mauco), earned certain
capital gain on sale of shares of Indian Company. Such gain was claimed exempt
in terms of Article 13(4) of India-Mauritius Treaty.
The tax officer of Mauco called for certain information about
investment decisions, board meetings, etc. The AO also examined and recorded
statement of the director of the share-broking company in India through which
Mauco had purchased and sold shares. Based on such statement, the AO noted that
the decision for purchase and sale of shares was conveyed to the share-broking
firm by one Mr. SR who held 99% shares of Mauco and was also one of the 3
directors of Mauco. The AO therefore asked for copy of passport of Mr. SR as
also the details of board meetings and resolutions passed by Mauco. The AO
denied the benefit of the treaty to Mauco by holding that :
(i) Copy of passport of Mr. SR was not made available
despite specific request to that effect;
(ii) In absence of evidence as to where Mr. SR was when
the investment decisions were made, it could be concluded that effective
management of Mauco was in India.
The AO accordingly held Mauco to be resident of India and
assessed Mauco in respect of capital gains income.
Held :
The Tribunal noted decision of the co-ordinate Bench in case
of Radharani Holdings Private Limited (2007) 110 TTJ 920 (Delhi). In that case,
the Company was held to be resident of Singapore as all the board meetings were
held in Singapore and this was substantiated by the residency certificate
obtained from Singapore Government in addition to furnishing minutes of the
board of directors duly authenticated by the Indian Commission in Singapore. The
Tax Department sought to distinguish applicability of the ruling on the ground
that no such evidence was furnished by Mauco. As against that, the taxpayer was
seeking to place reliance on details of board meetings, presence of other
directors at such board meetings, etc. It was also contended that onus of
proving that control and management of Mauco is not situated in Mauritius is on
the Tax Department.
The ITAT restored the matter to the AO for deciding the issue
afresh/de novo. The Tribunal directed the AO to consider all the documents and
examine the authenticity thereof with regard to claim of board meetings held in
Mauritius. The ITAT observed that :
“After considering all the documents which were either placed
before the lower authorities or before the Bench for the first time, we find
that it is very essential to once again examine the authenticity of the same and
their relevance with regard to board meetings held in Mauritius. For this
purpose, either third party evidence or evidence by any government agency either
situated in Mauritius or in India is required to be brought on record to
substantiate the assessee’s claim. In the interest of justice and fair play, we
restore both the appeals to the file of the AO for deciding the same afresh/de
novo in terms of our observations contained hereinabove.”
