The assessee, an individual, was a non-resident for the relevant assessment year. He sold units of equity oriented mutual funds and derived short term capital gains (STCG). In his return of income, he claimed STCG amounting to Rs. 1.35 crore as exempt to tax in India by virtue of Article 13(5) of the India-UAE Tax Treaty. The AO held that the underlying instrument of any equity oriented mutual funds was nothing but a ‘share’ and, therefore, as per Article 13(4) of the said Tax treaty, STCG would be taxable in India. Accordingly, he made addition of Rs. 1.35 crore. CIT (A) held that said short term capital gains were not taxable in India. He was of the view that the equity oriented mutual funds were not ‘shares’ and, therefore, the case was governed by Article 13(5) of the said Tax Treaty. On appeal by the revenue the Tribunal held that the  definition of ‘securities’, it is clear that ‘shares’ and ‘units of a mutual fund’ are two separate types of securities. Applying the above meaning to the provisions of the Tax Treaty, the gains arising from the transfer of units of mutual funds should not get covered within the ambit of Article 13(4) of the Tax Treaty, and should consequently be covered under Article 13(5) of the Tax Treaty. Therefore, the assessee, who is a resident of UAE for the purposes of the Tax Treaty, STCG arising from sale of units of equity oriented mutual funds and debt oriented mutual funds should not be liable to tax in India in accordance with the provisions of Article 13(5) of the Tax Treaty. (AY. 2012-13 )