Right to Tax in UAE Sufficient to Claim Benefit of India-UAE DTAA; No Need to Prove Actual Payment of Tax | ITAT

Case Details: Saket Kanoi vs. DCIT - [2024] 168 taxmann.com 418 (Delhi-Trib.)

Judiciary and Counsel Details

• Dr. B.R.R. Kumar, Accountant Member & Yogesh Kumar US, Judicial Member
• Sunny Jain & Rajesh Sanghwi, CAs for the Appellant.
• Vizay B. Vasanta, CIT-DR for the Respondent.

Facts of the Case

The assessee, a resident of the UAE, received capital gains in India on the sale of mutual funds. He did not offer it to tax, relying upon Article 13(5) of India-UAE DTAA. The Assessing Officer (AO) held that it was not a case of double taxation as income had not suffered tax anywhere in the world. Accordingly, he denied the assessee benefit of India-UAE DTAA.

On appeal, the CIT(A) reversed the AO’s order and granted the benefit of India-UAE DTAA to the assessee. The matter reached the Delhi Tribunal.

ITAT Held

The Tribunal held that in the case of ITO v. Shri Ramesh Kumar Goenka in [2010] 39 SOT 132 (Mum.), it was held that the expression ‘liable to tax’ in the contracting state as used in article 4(1) of Indo-UAE-DTAA does not necessarily imply that the person should actually be liable to tax in that contracting state. It was enough if the other contracting state had the right to tax such a person, whether or not such a right was exercised.

In the instant case, since the assessee was a resident of the UAE, it was only the UAE that had the right to tax capital gain and not India. Article 13 of the agreement for the avoidance of double taxation between India and UAE provided an exemption from capital gains tax in India to residents of the UAE. Thus, the benefit of the DTAA was to be given to the assessee.

List of Cases Reviewed

• Addl. DIT v. Frate Line, Dubai in IT A No. 2439/Mum/2008 (Para 8)
• ITO v. Shri Ramesh Kumar Goenka in ITA No. 3562/Mum/2009 (Para 9)
• DCIT v. Shri K. E. Faizal in ITA No. 423/Coch/2018 (Para 10) Followed.

List of Cases Referred to

• Addl. DIT v. Frate Line, Dubai ITA No. 2439/Mum/2008 (para 8)
• ITO v. Shri Ramesh Kumar Goenka ITA No. 3562/Mum/2009 (para 9)
• DCIT v. Shri K. E. Faizal ITA No. 423/Coch/2018 (para 10)
• ADIT v. Green Emirate Shipping and Travels 286 ITR 60 (para 11).