![No Capital Gain Tax Payable By NRI On Mutual Fund Gains: ITAT [READ ORDER]](https://www.jurishour.in/wp-content/uploads/2025/04/mutual-funds-1.webp "mutual funds (1)")
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that no capital gain tax payable by Non-Resident Indian (NRI) on Rs. 1.35 Crore Mutual Fund Gains Under India-Singapore tax treaty.
The bench of Beena Pillai (Judicial Member) and Renu Jauhri (Accountant Member) has observed that the assessee, who is a resident of Singapore for the purposes of the Tax Treaty, short term capital gain (STCG) arising from sale of units of equity oriented mutual funds and debt oriented mutual funds should not be liable to tax in India in accordance with the provisions of Article 13(5) of the Tax Treaty.
The appellant/assessee is a non-resident Indian and filed return declaring income of Rs. 4,53,768. The case was selected for scrutiny. The assessee had shown income from short-term capital gain on debt funds of Rs. 88,75,230/- and short-term capital gain on equity funds of Rs. 46,91,140/- in respect of which deduction was claimed under the Double Taxation Avoidance Agreement (DTAA).
The assessee had claimed that capital gains earned on the transfer of equity shares can not be charged as she is a tax resident of Singapore and the provisions of Article 13 of DTAA are applicable. However, AO did not accept the contentions of the assessee and proposed to tax on the entire amount in the draft assessment.
The assessee filed objections before the DRP. However, the action of the AO was endorsed by DRP which held that the capital gains arising from the units of mutual funds that derived substantial value from assets located in India are taxable in India.
Accordingly, AO proceeded to tax the short-term capital gain of Rs. 1,35,66,368 vide assessment order u/s 143(3) r.w.s. 144C(13).
The assessee has preferred an appeal before the Tribunal. The assessee has submitted a breakup of short-term equity and debt mutual funds and claimed that the investment was made directly by the assessee and not by the portfolio manager. Bank statements show investments made to mutual funds and sale consideration credited directly by mutual funds to the assessee’s bank account.
The tribunal while allowing the appeal held that the assessee is entitled to deduction in respect of short-term capital gains of Rs. 1,35,66368 under the DTAA between India and Singapore is allowable.
Case Details
Case Title: Anushka Sanjay Shah Versus ITO
Case No.: IT(IT)A No.174/MUM/2025
Date: 26.03.2025
Counsel For Appellant: K Shivaram & Shri Rahul Hakani
Counsel For Respondent: Krishna Kumar
