Tribunal rules on place of effective management for Mauritius entities, affirms India Mauritius DTAA benefit applicability

In brief

In the recent order¹ , the Delhi bench of the Income-tax Appellate Tribunal (Tribunal), ruled in favour of the Mauritius-based taxpayer, holding that capital gains from the sale of shares were exempt from Indian tax under Article 13(4) of the India–Mauritius Double Taxation Avoidance Agreement (DTAA). It accepted the taxpayer’s Mauritian residency, supported by board records and valid Tax Residency Certificates (TRCs), upholding their sufficiency to claim treaty benefits in line with Central Board of Direct Taxes (CBDT) Circular No. 789 and Supreme Court precedent. The Tribunal rejected the Revenue’s allegations of tax avoidance and dual residency, recognising that the investment structure had genuine commercial substance and was driven by regulatory and lender requirements rather than tax considerations.