Capital Gain earned by a Singapore-Company on Sale of Debt Instrument is not Taxable in India as per DTAA: ITAT Mumbai

Capital Gain earned by a Singapore-Company on Sale of Debt Instrument is not Taxable in India as per DTAA: ITAT Mumbai

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The ITAT Mumbai in Citicorp Investment Bank (Singapore) Ltd v. DCIT, held that the sale consideration received by a Singapore based Company on sale of debt instrument is not taxable as capital gain under the Income Tax Act in view of article 13(4) of the India-Singapore Double Taxation Avoidance Agreement (DTAA).

Assessee-Company, a Singapore resident, declared a Capital Gain of Rs. 86,62,63,158/- on sale of debt instruments and claimed exemption under Article 13(4) of India-Singapore Double Taxation Avoidance Agreement (DTAA or Treaty). Assessee claimed that it is liable to tax in Singapore of its worldwide income. The Singapore’s Revenue authority has confirmed the taxation on assessee in Singapore.

Before the Tribunal, the assessee furnished the certificate issued by Singapore Tax Authority certifying that selling of India debt securities from foreign exchange transaction in India, the income accrued or derived by assessee is taxable in Singapore. Allowing relief to the assessee, the bench said that “Article 13(4) of Treaty (supra) clearly speaks that gain derived by a resident of contracting State (Singapore) from the alienation of any property other than those mentioned in paragraph 1 & 2 of this Article (13) shall be taxable in that State (Singapore). Article 24 of the Treaty provides the limitation of benefit provision used by such country which imposes on a tax of certain payer on remittance basis. The limitation provided under this Article operates in conjunction with the provisions of Treaty which are related with ‘reduced rate of tax’ or ‘exempted’ not taxed in the country of source.”

Read the full text of the Order below.

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