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moreRSM India Newsflash - Mumbai ITAT upholds Treaty protection; upholds Indirect Transfer gains taxable only in Singapore.
Dear Sir/ Madam,
Hope you are doing well!
Please find our latest Newsflash on a significant ruling by the Hon’ble Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) in the case of eBay Singapore Services Pte. Ltd.
In this ruling, the Tribunal held that capital gains arising from the indirect transfer of Indian assets through the sale of shares of a Singapore company by another Singapore entity are not taxable in India. Relying on the Tax Residency Certificate (TRC) and comprehensive factual evidence, the ITAT concluded that taxing rights over such gains lie exclusively with Singapore under Article 13(5) of the India–Singapore DTAA, as other clauses of Article 13 did not cover such transactions.
The Tribunal also rejected the Revenue’s contention that management and control were exercised from the U.S., observing that the Appellant’s Board of Directors operated independently from Singapore. It further reaffirmed that treaty provisions override domestic deeming fictions under Section 9(1)(i) where they are more beneficial to the taxpayer.
This decision reinforces the importance of valid TRCs, factual residency evidence, and absence of “look-through” clauses in determining the taxability of offshore share transfers.
Please feel free to reach out to us in case of any pertinent doubt/ query