The High Court of Delhi instructs the AO to furnish Vodafone Mauritius with data in order to assess the TRC’s legality.
Case Title: VODAFONE MAURITIUS LIMITED Versus ACIT
Date: 30.05.2023
W.P.(C) 7622/2023 & CM Nos.29564-65/2023
CORAM: HON’BLE MR. JUSTICE RAJIV SHAKDHER HON’BLE MR. JUSTICE GIRISH KATHPALIA
Introduction
The Delhi High Court has ordered the AO to give Vodafone Mauritius with information in order to assess the authenticity of the Tax Residency Certificate (TRC).
The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia stated that no information or substance was presented to the petitioner, implying that the TRC delivered to the petitioner was not a legally valid document. The petitioner has disputed the Assessing Officer’s decision and notice without respect to the Tax Residency Certificate (TRC) granted in its favour.The transaction that the AO has attempted to bring under the jurisdiction of the Income Tax Act of 1961 involves the petitioner’s selling of shares in an Indian corporation.
Courts analysis and Decision
The shares were sold by the petitioner to a company called Bharti Enterprises (Holding) Pvt. Ltd. Concededly, the transaction occurred within Fiscal Year (FY) 2015-16.
The shares were sold for Rs. 1,295 crore by the petitioner. The petitioner received the compensation without being taxed at the source.
The petitioner stated that because it was given a TRC under Mauritius legislation, it is entitled to benefit from the India-Mauritius Doube Taxation Avoidance Agreement (DTAA) reached between India and Mauritius.The AO decided that the TRC provided to the petitioner was insufficient to show its residence status, making the petitioner eligible for treaty benefits. The court noted that the AO inferred a purpose to the assessee, namely that it would engage in tax evasion, including treaty shopping, without providing any material or information to it.
Judgment- click here to review the judgment2
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Written by- Anushka Satwani