In the matter of
SC Lowy P.I. (LUX) S.A.R.L., Luxembourg Vs ACIT, International Taxation
(ITA No.3568/DEL/2023 )\
Summary
M/s S C Lowy P.I. (LUX) S.A.R.L., Luxembourg (“The Assessee” or “The Appellant”) is incorporated in the year 2015 in Luxembourg. The Assessee is FPI registered with SEBI. The Assessee filed an ITR for AY 2021-22 declaring interest Income, Business Income, and Capital Gain Income. The Assessee charged tax @ 10% on interest income claiming benefit of Article 11 of India- Luxembourg DTAA and exempted other incomes under Articles 7 and 13(6) of DTAA. The Assessee submitted various documents such as TRC issued by Luxembourg, ITR Filed in Luxembourg for 2015 to 2019, Details of investments made outside India, etc. The AO denied the benefit of DTAA invokingthe Principal Purpose Test (PPT) as given under Article 29 of DTAA contending that the Assesee is based in Luxembourg only to claim the benefit of the Treaty and have original benefit interest in Cayman Island. The assessee company is just a conduit and the real owner is the SC Lowy Primary Investments Limited who are tax residents of the Cayman Islands.
The Hon’ble ITAT held that the activities of the assessee are beyond Indian jurisdiction and it also filed tax returns and paid tax in Luxembourg on its worldwide income. The assessee controls the assets as well as income on its own and cannot be termed a conduit. Further, the AO has not brought any cogent material on record to indicate that the assessee in substance a conduit except for expressing his views and presumptions. The benefit of the reality can’t be denied without any cogent material with the revenue to establish that the assessee is only a conduit.
Therefore, the AO was directed to grant the benefit of the treaty to the Assessee.
文章：
1. Brief facts of the case:
- M/s S C Lowy P.I. (LUX) S.A.R.L., Luxembourg (“The Assessee”) is a Limited Liability Company incorporated in 2015 under the law of Luxembourg. It is a Category II – Foreign Portfolio Investor registered with the Securities and Exchange Board of India (SEBI).
- The Assessee is a subsidiary of SC Lowy Primary Investments Limited, Cayman Island and it invests in securities.
- The Assessee filed its return of Income for AY 2021-22 declaring the following incomes:
- Interest Income- Chargeable to Tax @ 10% claiming the benefit of Clause claiming the benefit of Article 11 of India- Luxembourg DTAA.
- Business Income- Exempted under Article 7 of DTAA
- Capital Gain Income- Exempted under Article 13(6) of DTAA
- The Assessee’s case was selected for complete scrutiny under CASS due to a large refund claimed by the non-resident.
- During the Assessment proceedings, the Assessee furnished the following documents:
- Difference between commercial activities of the Holding Company and Subsidiary Company;
- Commercial Rationale of the existence of the Assessee in Luxembourg;
- Tax Residency Certificate (TRC) issued by Luxembourg;
- ITRs filed in Luxembourg from 2015 to 2019;
- Details of investments made in India and income earned in India
- The Assessing officer made the following observations and denied the benefit of DTAA to the Assessee:
- The Assessee arranged to avoid tax through a treaty shopping mechanism.
- The assessee company is just a conduit and the real owner is SC Lowy Primary Investments Limited which are tax residents of the Cayman Islands;
- TRC is not sufficient to establish the tax residency if the substance establishes otherwise.
- The assessee company is also not a beneficial owner of income as control and dominion of funds is not with the company.
- There is no commercial rationale for the establishment of the assessee company in Luxembourg as the commercial outcomes would be identical irrespective of the location of funds.
- the Assessee preferred objections before the Ld. DRP and Ld. DRP sustained the additions made by the AO including denial of DTAA benefits. Subsequently, AO has passed the final assessment order.
- Therefore, the Assessee filed an appeal against the Impugned assessment order before the Income Tax Appellate Tribunal.
Read Also: CBDT Issued Guidance on the Application of the Principal Purpose Test (PPT) under India’s DTAA| Circular No. 01/2025 Dated 21st January 2025
2. Contention of the Assessee:
The Assessee made the following submission:
- The Assessee is a Tax Resident of Luxembourg and is liable to pay tax in Luxembourg on worldwide Income. The Assessee is holding a valid TRC.
- The Assessee placed reliance on the decision of the Hon’ble Delhi High Court in the case of Tiger Global International III Holdings [W.P.(C) 6764/2020] wherein the Hon’ble Court held that validity and sanctity of TRC issued by competent authority cannot be questioned unless in case of fraud, sham transactions where the entity has no vestige of economic substance or the transaction is alleged to be aimed at camouflaging an illegality. Furthermore, the onus is on Revenue to establish that the transaction is a sham or a colorable device.
- Principal Purpose Test (PPT): The DTAA has been amended by Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting signed by India and Luxembourg on 7th June 2017 (the ‘MLI”). The provisions of MLI applicable to DTAA take effect in India for “taxes levied concerning taxable periods beginning on or after 1st April 2020, i.e., before assessment year 2021-22 and hence applicable for the year under reference.
- 纳税人并非为了获取条约优惠而在卢森堡注册成立，理由如下：
- 该公司成立于2015年（主要目的测试（PPT）于2020年4月1日起在印度实施）；
- 上诉人86%的投资位于印度以外的司法管辖区；
- 上诉人已在卢森堡就其全球收入申报纳税并缴纳税款；
- 上诉人既是所作投资的法律所有者，也是受益所有者；
- 上诉人在卢森堡为相关投资承担了大量的运营支出，包括咨询费、法律及诉讼费、其他专业费用，以及办公场所租金、银行账户费用、会计费等行政开支；
- 上诉人至今仍存续于卢森堡，并继续持有大量投资。
3. Contention of the Respondent:
税务部门提出了以下意见：
- 上诉人是在卢森堡成立的，目的是为了从双重征税协定（DTAA）中获取税收优惠，因为该公司是由开曼群岛的控股公司在卢森堡设立的。
- 开曼群岛与印度之间不存在双重征税协定，仅存在信息交换协议，因此不存在双重征税协定。来自开曼群岛的离岸公司在卢森堡没有实体存在。
- 因此，根据与卢森堡签署的多边公约（MLI），纳税人无权申请双重征税协定优惠，因为纳税人仅是一个导管实体。
4. 印度所得税上诉法庭（ITAT）的分析
印度所得税上诉法庭（ITAT）进行了如下分析：
- 提交给ITAT的问题是：
- 卢森堡当局签发的税收居民身份证明（TRC）对于享受双重征税协定优惠是否有效，以及在相应的双重征税协定/多边公约中是否存在利益限制（LOB）条款，且是否符合第29条的规定；以及
- 税务部门是否可以超越上述规定，提出其他条件来限制双重征税协定优惠的授予。
- 在Tiger Global International III Holdings（前引案）一案中，德里高等法院裁定：
- 主管当局签发的TRC的有效性和神圣性必须被视为不可侵犯，并应给予应有的重视，因为它证明了相关实体是位于缔约国境内、拥有受益所有权的善意实体，旨在缔约国境内从事合法的商业目的，除非有证据表明存在欺诈和虚假交易。
- 根据第789/2000号通函，当局签发的TRC构成确定财政居民身份和受益所有权的充分证据。
- 税务部门的指控必须基于确凿且令人信服的证据，而不应仅仅是猜测、怀疑或出于某种调查的预设需求。
- 当实体出具TRC并证明符合LOB条件时，税务部门若要推翻其有效性推定，必须在最初阶段就确立此类指控。
- 对持有TRC的实体进行“刺破公司面纱”仅限于税务欺诈、虚假交易、掩盖非法活动等极其狭窄的情况，且这些指控的成立必须符合严格且苛刻的举证标准，而不能仅凭怀疑。
- 因此，税务部门必须接受TRC。如果记录在案的事实满足了第29条关于利益限制（LOB）的规定，税务部门不得超越上述授权，除非能提供确凿且令人信服的证据来证明纳税人确实充当了导管角色。
- 在本案中，上诉人已提交了TRC，且税务部门并未对该TRC的有效性提出任何质疑。
- 此外，纳税人的业务活动发生在印度管辖范围之外，且其已在卢森堡就全球收入申报纳税。纳税人为卢森堡的投资承担了大量的运营支出。
- 纳税人独立控制其资产及收入，不能被称为导管实体。此外，评估官（AO）除了表达其个人观点和推测外，并未提供任何确凿的证据来表明纳税人在实质上是一个导管。
- 当纳税人提交了相关TRC并证明其自投资之日起在来源国一直存在时，税务部门不得通过引入其他条件来拒绝给予条约优惠。
5. Final Order
ITAT裁定，在税务部门没有确凿证据证明纳税人仅为导管实体的情况下，不得拒绝给予条约优惠。
因此，责令评估官向纳税人授予条约优惠。
