- Mauritius Co (MCO) held shares of Singapore Co (SCO) who invested in multiple Indian Co before 1.4.2017
- US retail bought stake of Singapore co and in turn stake of Indian co effectively
- AAR ruled that MCO existence is an arrangement was to avoid tax as ultimate control and management is in USA and not Mauritius. Some basis of ruling are
- Independent directors making capacity was not in Mauritius
- Minutes of the meeting shows US directors where involved in key decision
- Bank signatory in Mauritius upto limit above which is signatory right of USA beneficiary
- Outcome of ruling
- Singapore treaty & Mauritius treaty benefit not available as shares were not of ICO but if SCO. Immediate investment destination was considered
- Indirect transfer of Indian assets are not directly exempt overturned past rulings
- It is imperative to demonstrate the principal purpose of investment via Mauritius even under PPT concept of MLI
- Importance is given to financial, management control and beneficial ownership which affirms settle legal position
- AAR overlook article 13(4) which is for residual assets covering indirect transfer
- So dispute of Mauritius saga continues
