IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘D’: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.339/DEL/2022 (Assessment Year: 2012-13)

Essar Com Limited, vs. ACIT, Circle 1(2)(2), 10, Frere Felix De Valois Street, New Delhi.

Post Louis, Mauritius.

(PAN :AABCE6655R) ITA No.340/DEL/2022 (Assessment Year: 2012-13)

Essar Communications Limited, vs. ACIT, Circle 1(2)(2), 10, Frere Felix De Valois Street, New Delhi.

Post Louis, Mauritius.

(PAN : AABCE7190F)

(APPELLANT) (RESPONDENT)

ASSESSEE BY :Shri Percy Pardiwala, Sr. Advocate Shri Nishant Thakkar, Advocate Shri Hiten Thakkar, Advocate Shri Anand Jain, CA REVENUE BY :Shri N. Venkatraman, ASG Shri Vipul Agarwal, CIT DR Smt. Rini Handa, JCIT Smt. Aditi Gupta, DCIT Date of Hearing : 08.05.2025 Date of Order : 30.06.2025

O R D E R

PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :

1. The assessees, Essar Com Ltd. and Essar Communications Ltd., have filed the appeals against the order of the Learned Commissioner of Income Tax (Appeals)-42, New Delhi [“Ld. CIT(A)”, for short]dated23.12.2021for the Assessment Year 2012-13.

2. Since the issues are common and the appeals are connected, hence the same are heard together and are being disposed off by this common order. We take ITA No.340/Del/2022 for AY 2012-13 in the case of Essar Communications Ltd. as lead case.

3. The assessee, Essar Communications Ltd., has raised the following grounds of appeal in ITA No.340/Del/2022 for AY 2012-13 :-

“Based on the facts and circumstances of the case, and in law, ECL respectfully craves leave to prefer an appeal under Section 253 of the Income- tax Act, 1961 (the Act') against the order dated 23 December 2021 passed by Commissioner of Income (Appeals) - 42, New Delhi [CIT(A)] under section

250 of the Act, on the following grounds:

On the facts, in law and in circumstances of the case, the learned CIT(A):

General

1. erred in holding that the capital gains earned by the Appellant on the sale of Vodafone Essar Limited (VEL') shares by the Appellant to Euro Pacific Securities Limited ('EPSL') are taxable in India;

Holding that the Appellant was tax resident of India and that its control and management is situated wholly in India

2. erred in treating the Appellant as tax resident of India under the provisions of section 6(3) of the Act:

3. erred in disregarding the settled law with respect to tax residency of a foreign company under the provisions of section 6(3) of the Act as established through various judicial precedents on this aspect as well as provisions of memorandum of Finance Bill, 2015 introducing the provisions of place of effective management;

4. was not justified in ignoring the fact that control and management of the Appellant was with the board of directors of the Appellant, that all the decisions concerning the affairs of the Appellant have been taken by its board of directors outside India and in ignoring the supporting documentary evidence and justifications filed before the learned CIT(A) in this regard including letters from Mauritian government authorities;

5. erred in disregarding the settled principle of law that the test of tax residence is to be applied based on the facts of the relevant year alone, as upheld by various judicial precedents;

Denying the benefits of Article 13(4) of India-Mauritius tax treaty (tax treaty') to the Appellant

6. erred in holding that the Appellant was not entitled to the benefits of Article 13(4) of the tax treaty on the sale of VEL shares by the Appellant to EPSL;

7. erred in ignoring the facts that the Appellant was incorporated in Mauritius, holds tax residence certificates, global business license etc and that the Appellant was entitled to the benefits of Article 13(4) of the tax treaty;

8. erred in disregarding settled law based on various judicial precedents in this regard;

9. erred in not following the Central Board of Direct Taxes (CBDT'))

Circular No 789 which is squarely applicable to the Appellant's case and err