In a significant ruling, the Mumbai bench of the Authority for Advance Rulings (AAR) has rejected tax benefits for a large transaction by an Indian company under the India-Mauritius Double Taxation Avoidance Agreement.
The transaction involved Mauritius entities and the Indian company was seeking exemption of capital gains on the sale of shares. Arun Giri of Taxsutra tells us about this ruling and explain to us why this is significant.
Giri said, "It is important as it involves a large Indian group. This was a mega-deal that happened a few years ago. A large Indian group sold its shares in an Indian company via the Mauritius route. Then the company went to the authority for a relief claiming Mauritius treaty. At the time of the deal, this exemption was available.”