India: Transfer by Irish entity of shares in U.S. entity holding shares in Indian subsidiary not taxable in India under Irish treaty (tribunal decision)
Treaty allocates taxing rights to India only when shares of an Indian resident company are transferred.
The Delhi Bench of the Income-tax Appellate Tribunal held that capital gains recognized by an Irish entity upon a transfer of shares in a U.S. entity holding shares in an Indian subsidiary were not taxable in India under the India-Ireland income tax treaty.
The tribunal concluded that the domestic deeming fiction for indirect share transfers could not be read into the Irish treaty, and that the treaty allocates taxing rights to India only when shares of an Indian resident company are transferred. The tribunal also rejected the tax authority’s reliance on the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) in the absence of any evidence of the treaty abuse, particularly when the transaction formed part of a broader group restructuring.
The case is: FireEye Ireland Limited v. ACIT (IT(IT)A 1431/Del/2025)
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