Mobile Number Mentioned In ITR Turned Out To Be A Fraud Number On True Caller Can't Be A Ground To Refuse Tax Treaty Benefit: ITAT

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee, Abu Dhabi Investment Authority, is liable to benefit provided under Article 24 of the India-UAE Double Taxation Avoidance Agreement (DTAA), which provides that the government of one contracting state shall be exempt from tax in other contracting states in respect of any income derived by such income from those other contracting states.

The bench of Amit Shukla (Judicial Member) and Amarjit Singh (Accountant Member) has observed that the CIT(A) denied the benefit of Article 24, disbelieving that the assessee is in fact Abu Dhabi Investment Authority, as mentioned in Article 24(2)(b)(ii). The CIT(A) held that the assessee was a fraud entity based on the mobile number mentioned in ITR '9999999999' which turned out to be a fraud number on True Caller. The ITAT found the reasoning very flimsy and remarked that once all the other details have been provided and still there is doubt, then CIT(A) should have verified the PAN and the address provided in the return to see whether it is an Abu Dhabi government-owned company or not.

The assessee/appellant, Abu Dhabi Investment Authority, holds a valid registration as a Category 1 Foreign Portfolio Investor (FPI) obtained in accordance with the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations 2019 (FPI Regulations). ADIA is a tax resident of the United Arab Emirates (UAE) and holds a valid Tax Residency Certificate for the calendar years 2018 and 2019. For the assessment year under consideration, the appellant had electronically uploaded its return of income, declaring total income and claiming a tax refund.

The return of income was processed by the Assistant Director of Income Tax Centralised Processing Centre (CPC), Income Tax Department, Bengaluru, and an intimation under Section 143(1) was issued. The AO had made additions to the total income and raised tax demand. In response to the intimation, the appellant filed a request with CPC on the income tax portal to reprocess the return of income. On reprocessing the return, CPC issued a rectification order under Section 154.

In the rectification order, the AO has erroneously shown a total income and raised tax demand. In so far as loss on long-term capital gain and loss on short-term capital gain were treated as gains, the intimation accepted the contention of the assessee that there was an error on the part of the CPC because the assessee had declared total long-term capital loss and short-term capital loss. However, in so far as the interest amount of Rs. 365.40 crore, which was claimed to be exempt under Article 24 of the India-UAE DTAA, which was denied, the same was upheld, and it was held by him that it is 20% taxable.

The CIT (A) held that the assessee could not make out a case that it is the same company, which is mentioned in Article 24(2)(b). The reason and basis for denying the benefit were that in the return of income, the mobile number . was given '9999999999, 'and from the true caller, it was mentioned that it was a fraud with several spam reports.

From the bare perusal of the return of income itself, it can be seen that the shareholder is the Department of Finance of Abu Dhabi, and its address is that of the building and address of the Government of Abu Dhabi. Further, even the email address mentioned in the return of income, including the PAN, mentions that the assessee was the Abu Dhabi Investment Authority and is a tax resident of the United Arab Emirate. In so far as mobile number is concerned, he submitted that since the return of income is not uploaded if the mobile number is not mentioned and since the assessee does not have any mobile number in India, therefore, like all the assessees in such circumstances have been mentioned, 9999999999. Apart from that, CIT (A) did not even confront the issue of whether the assessee is an authority mentioned in Article 24(2)(b). Thus, the order of CIT (A) cannot be upheld.

The department submitted that matter may be restored to the file of CIT (A) to examine the tax residency certificate and the applicability of Article 24.

The tribunal held that since Abu Dhabi Investment Authority has been specifically mentioned in Article 24(2)(b)(ii), therefore, none of its income is taxable in India. The charging of interest of Rs. 365.40 crore is held to be non-taxable in India.

Counsel For Appellant: Dhanesh Bafna

Counsel For Respondent: Anil Sant

Case Title: Abu Dhabi Investment Authority Versus Dy. Commissioner of Income Tax

Case No.: ITA No.3415/Mum/2023

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