Indian High Court Order On Mauritius Tax Breaks Stayed

by Lorys Charalambous, Tax-News.com, Cyprus

20 November 2002

The Indian Supreme Court has stayed a Delhi High Court judgement which quashed a Central Board of Direct Taxes circular allowing Mauritius-based entities to make tax-exempt investments in India.

Reporting on the Supreme Court appeal against the limitation of tax benefits previously available under the terms of the Indo-Mauritius Double Tax Avoidance Agreement (DTAA), the Indian Financial Express announced that:

'A bench comprising justices Ruma Pal and BN Srikrishna while admitting the appeal filed by the government against the May 31 02 order of the High Court, on Monday stayed the lower court order and issued notice to the respondents, Azadi Bachao Andolan, an NGO, and Shiva Kant Jha former chief commissioner of income tax.'

Responding to the verdict this week, Prashant Bhushan, counsel for the respondents (the tax authorities, in effect) complained that: 'the stay order passed by the SC is totally unfair and against the interest of the public exchequer. If eventually the government appeal is dismissed and the HC order is upheld, the government may not be able to recover tax from these companies as it will be barred by limitation.'

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