Delhi High Court Directs AO To Provide Information To Vodafone Mauritius To Drive Out The Validity Of TRC

The Delhi High Court has directed the AO to provide information to Vodafone Mauritius to determine the validity of the Tax Residency Certificate (TRC).

The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that nothing in the form of information or material has been put to the petitioner, which would conclude that the TRC issued to the petitioner was not a viable document in law.

The petitioner has challenged the order and notice passed by the Assessing Officer without regard to 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 has sold the shares to an entity, namely, Bharti Enterprises (Holding) Pvt. Ltd. Concededly, the transaction took place in Financial Year (FY) 2015-16.

The petitioner sold the shares for Rs. 1,295 crore. The consideration was paid to the petitioner without deduction of tax at source.

The petitioner contended that since it has been issued a TRC under the laws of Mauritius, it is entitled to take advantage of the India-Mauritius Double Taxation Avoidance Agreement (DTAA) obtained between India and Mauritius.

The AO ruled 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.

The court noted 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.

The court, while quashing the notices and orders, directed the AO to confront the petitioner with material or information that would have her arrive at the conclusion that the TRC on which the petitioner seeks to place reliance deserves to be rejected.

Case Title: VODAFONE MAURITIUS LIMITED Versus ACIT

Citation: 2023 LiveLaw (Del) 526

Date: 30.05.2023

Counsel For Petitioner: Fereshte D. Sethna, Mrunal Parekh, Disha Jham

Counsel For Respondent: Puneet Rai, Ashvini Kumar, Madhavi Shukla, Nikhil Jain Mr. Ravi Prakash, Farman Ali, Aman Rewaria, Astu Khandelwal, Usha Jamnal, Yasharth Shukla

Click Here To Read The Order