Point of Law : Taxation - Assessment - Liability of beneficiaries - trustee can be representative assessee but in this case trustee being a resident of Jersey cannot be an agent of ADIA, in our view that is not sustainable as the Act does not provide anywhere that only trustee who is resident of India can be an agent under Section 160 of the Act.

JUDGMENT :

K. R. SHRIRAM, J.

1. Rule. Rule made returnable forthwith and heard and disposed at the admission stage itself with the consent of the counsel.

2. In both the petitions, a common ruling dated 18th March 2020 passed by the Authority for Advance Ruling (Income Tax) (hereinafter referred to as AAR) is impugned. Hence both the petitions are taken up together. Shri Kotangle did not wish to file any reply since according to him only questions of law were involved. We shall take Writ Petition No.770 of 2021 filed by Abu Dhabi Investment Authority (hereinafter referred to as ADIA) as lead petition.

3. ADIA is a public institution owned by and subject to the supervision of the Emirate of Abu Dhabi. Article 4 (2) (d) of the India-United Arab Emirates (“UAE”) Double Taxation Avoidance Agreement (hereinafter referred to as the “India-UAE DTAA”) expressly provides that ADIA is a resident of UAE for the purposes of Article 4 thereof and, accordingly, ADIA is entitled to invoke the beneficial provisions of the India-UAE DTAA for the purpose of determining its tax liability in India. ADIA files its return of income (hereinafter referred to as “ROI”) in India, disclosing therein income that falls within the scope of Section 5 (2) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) but in view of the exemption available in terms of the India-UAE DTAA, reports NIL taxable income in the ROI. ADIA does not have any permanent establishment/fixed place of business or any other form of presence in India and does not have any business connection/operations in India. AAR is a statutory authority constituted under Section 245-O of the Act to give a ruling on any question raised in respect of any transaction which has been undertaken or is proposed to be undertaken by a non-resident applicant or the tax liability of a non-resident arising out of a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with such non-resident or whether an arrangement, which is proposed to be undertaken by any person, being a resident or a non-resident, is an impermissible avoidance agreement as referred to in Chapter X-A. The ruling/order on the questions raised before AAR is binding only upon applicant who sought the answer and the revenue authority assessing such applicant but the same has a persuasive value insofar as other assessees are concerned.

4. ADIA is challenging the order/ruling dated 18th March 2020 passed by AAR in case of ADIA as well as Equity Trust (Jersey) Ltd. (hereinafter referred to as ETL) as the trustee, which is petitioner in Writ Petition No.709 of 2021, denying ADIA the benefit of India-UAE DTAA read with relevant provisions of the Act in respect of the income accruing on the investments made or proposed to be made by Green Maiden A 2013 Trust (hereinafter referred to as the Trust), which was established by ADIA and ETL as settlor and trustee, respectively. The trust is settled by ADIA in Jersey. Under the Deed of Settlement dated 22nd July 2013 (the Deed of Settlement), the trust is being set up by and for the benefit of ADIA who is, apart from being the settlor, also the sole beneficiary of the trust. This trust is a revocable and determinable trust.

5. The following provisions of the Deed of Settlement are relevant:

(aaa) “Settlor” or “Sole Beneficiary” shall mean ADIA;

(ccc) “Term” shall mean the term of the Trust, which shall continue until the later of :

(i) 8 (eight) years from the date of Closing. By the end of the 7th (seventh) year, the Trustee may (on the request of the Investment Manager) seek a 1 (one) year extension for liquidation of the Trust and such extension shall be subject to the consent of the Sole Beneficiary; and

(ii) the date on which the remaining Receipts in the Trust Fund are distributed to the Sole Beneficiary after payment and discharge of all accrued expenses (including Operating Expenses), fees and liabilities of the Trust.

(eee) “Trust” shall have the meaning p