Case nº AAR No. 878 of 2010 of Authority for Advance Rulings, March 28, 2011 (case D.B. Zwirn Mauritius Trading No. 3 Limited Vs Director of Income Tax (International Taxation)-II)

PresidentP.K. Balasubramanyan, (J.) (Chairman), J. Khosla and V.K. Shridhar, Members
Resolution DateMarch 28, 2011


V.K. Shridhar, Member

  1. The applicant, D.B. Zwirn Mauritius Trading No. 3 Ltd. is a company incorporated in Mauritius and was issued a Tax Residence Certificate by the Mauritius Tax Authorities. It is engaged in the business of investments in different sectors. The applicant held 5,33,333 equity shares of Quippo Telecom Infrastructure Limited, an Indian company. These were acquired on 19th September, 2007, for a consideration of Rs. 2,13,33,320. On 10th November, 2009, the applicant entered into a share purchase agreement to sell these 5,33,333 shares to Geraldton Finance Limited, a Mauritius based company, for a consideration of Rs. 5,59.99,965. The applicant realized capital gain of Rs. 2,98.67.010.

  2. The Applicant has approached this Authority to determine whether by virtue of being a Mauritius resident, it is eligible to the benefits of the India-Mauritius DTAA and hence not subject to tax in India on the capital gains realized. It has sought the ruling of this Authority on the following questions:

  3. Whether the application filed by the Applicant before the Authority of Advance Ruling is maintainable under Section 245N of the Income-tax Act, 1961?

  4. Whether the Applicant, in relation to the transaction involving sale of shares as explained in the statement of facts, is liable to capital gains tax in Mauritius in terms of Article 13(4) of the Double Taxation Avoidance Agreement (DTAA) between India and Mauritius?

  5. Whether the transaction of sale of shares of an Indian company as per Share Purchase Agreement dated November 10, 2009 attracts capital gain tax liability in terms of provisions of Income Tax Act 1961 and Double Taxation Avoidance Agreement between India and Mauritius?

  6. Whether, in respect of the transaction of sale of shares explained in statement of facts, there is any withholding tax liability under Section 195 of the Income-tax Act, 1961.

    Question No. 1 was unnecessary and therefore deleted at the time of passing order under Section 245R (2) of the Act.

  7. The Learned Advocate submits that the applicant is holding a Tax Residence Certificate issued by the Mauritius Revenue Authority. It is filing tax returns as Mauritian resident and is entitled to claim benefits provided under the DTAA between India and Mauritius. Article 13(4) of the DTAA provides that the profits made by a resident of a contracting state from the alienation of shares shall be taxable only in that state. The Central Board of Direct Taxes...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT