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Gain on indirect transfer of Indian Co’s share not taxable in lack of corresponding amendment in India-Belgium DTAA

May 21, 2020[2020] 116 706 (Mumbai - Trib.)

INTERNATIONAL TAXATION : Where assessee, a Belgium based company, purchased 11.34% shares of a company located in Singapore which was in turn holding 99.99% shares in an Indian company, in view of fact that when assessee subsequently sold those 11.34 shares to another Indian company and, thus, Assessing Officer relying upon retrospective amendment in Explanation 5 to section 9(1)(i), brought capital gain arising from sale of shares to tax in India, it was to be concluded that unilateral amendment made in the Act by making available Explanation 5 to section 9(1)(i) with retrospective effect could not be read into India Belgium DTAA. Thus, in absence of any such corresponding provision in the India Belgium DTAA, Assessing Officer was not justified in holding that capital gain in question was liable to tax in India in hands of assessee as per provisions of Explanation 5 to section 9(1)(i)

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