The Delhi High court recently directed the Assessing Officer (AO) to provide information to vodafone Mauritius regarding validity of Tax Residency Certificate (TRC).
The writ petition is filed by the petitioner Vodafone Mauritius Limited challenging the order and notice issued by the AO without determining the Tax Residency Certificate (TRC) issued in its favour.
The transaction that the AO has sought to bring under the purview of the Income Tax Act, 1961 concerns the sale of shares by the petitioner of an Indian company, going by the name Bharti Infotel Pvt. Ltd.
The petitioner sold these shares to an entity, namely, Bharti Enterprises Pvt.Ltd. Concededly, the transaction took place in Financial Year (FY) 2015-16
He old the said shares for Rs.1,295 crores. Admittedly, the consideration was paid to the petitioner, without deduction of tax at source.
Counsel for the petitioner contented that since it has been issued a TRC under the laws of Mauritius, it is entitled to take benefit of the provisions of Article 13 of the IndiaMauritius Double Taxation Avoidance Agreement(DTAA) obtaining between India and Mauritius.
The AO in the assessment order stated that the TRC issued to the petitioner was not conclusive evidence, which would establish its residential status, consequently making the petitioner eligible for treaty benefits.
It was observed by the court that nothing in the form of information or material has been put to the petitioner, which would persuade it to conclude that the TRC issued to the petitioner was a not viable document in law.
Further, the bench observed that the AO has attributed an intent to the assessee- which is that it would indulge in tax evasion inter alia, by treaty shopping, without any material or information of such kind being put to it.
Hence, unless relevant information, if any, which is available with the AO, is put to the petitioner, which leads to a conclusion that the TRC obtained by the petitioner is not legally valid.
After observing the contentions and relevant materials, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia direct the AO to confront the petitioner with material or information, which according to her, would have her arrive at a conclusion that the TRC on which the petitioner seeks to place reliance deserves to be rejected.
Fereshte D. Sethna, Mrunal Parekh and Disha Jham, Advocates appeared for the petitioner. Puneet Rai, Standing Counsel appeared for the respondents.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
