ITAT Ruling In The Case Of SC Lowy

ITAT Delhi clarifies position on allowability of treaty benefit post applicability of Principal Purpose Test introduced through the amendment in Multilateral Instruments

The Delhi bench of Tribunal, recently in the case of S.C. Lowy P.I. (Lux) S.A.R.L. v. ACIT¹, analysed the principal purpose test ('PPT') introduced by way of amendment in the Multilateral Instruments ('MLI') while deciding on the allowability of benefit of India-Luxembourg tax treaty.

Facts of the case

The taxpayer, a limited liability company incorporated in Luxembourg in the year 2015 was a wholly owned subsidiary ('WOS') of an investment company registered in the Cayman Islands, the ultimate holding entity was an offshore fund registered in the Cayman Islands. The taxpayer was registered with SEBI as a Category II – Foreign Portfolio Investor in India.