Where Legislature, Executive and the Judiciary differ: Mauritius tax treaty debate with no full stop!

Where Legislature, Executive and the Judiciary differ: Mauritius tax treaty debate with no full stop!

Income tax law is notoriously complex, though the reasons are often misunderstood. Obvious reasons include tax law must address a huge and never-ending range of business transactions and structures. Last month’s Bombay High Court decision in the case of Aditya Birla Nuvo, Tata Industries and New Cingular (popularly called AT&T case) raises an interesting debate. The judgment stipulates that in a transaction involving sale of shares of an Indian entity (Idea Cellular) by AT&T Mauritius, the latter is not the real owner of the shares of Idea. AT&T US had acquired these shares through AT&T Mauritius and allowed them to be registered in the name of AT&T Mauritius as a ‘permitted transferee’. The Government Counsel’s pleadings focused deeper into the relationship between the parties evidenced by complex (and confusing) legal arrangements between the parties. The Court observing that since the real owner of the shares was not a Mauritius resident (entitled for treaty benefit), there was no significance of holding a valid tax residency certificate, and the treaty claim was rightfully denied by the administration.

http://www.business-standard.com/india/news/where-legislature-executivethe-judiciary-differ-mauritius-tax-treaty-debateno-full-stop/447336/