Introduction

In a decision pronounced relatively recently, the Indian Income Tax Appellate Tribunal (ITAT) was required to deal with a very crucial international tax issue: for Source State tax exemption of capital gains derived from sale of shares of a company situated in that jurisdiction, could the ‘beneficial ownership requirement’ be read into Art. 13 (Capital gains) of the relevant tax treaty? In other words, could such a requirement be (impliedly) inferred even if the relevant tax treaty provision does not expressly stipulate such a requirement?

This article analyses the above-mentioned judicial precedent.