Rights entitlement, which is granted on account of shareholding, cannot be regarded as being the same as shares, since the rights shares are allotted only on subscription and, therefore, capital gains arising on the sale of rights entitlements are covered under the provisions of art. 13(6) of the DTAA between India and Ireland, and consequently, the same cannot be subjected to tax in India as per art. 13 in the hands of an Ireland-based assessee. (AY.2021-22)
Vanguard Emerging Markets Stock Index Fund A Series Of Visplc v.ACIT (IT) (2025) 234 TTJ 801 / 125 ITR 128/ 172 taxmann.com 515 (Mum)(Trib)
S. 45: Capital gains–Rights entitlement-Capital gains arising on sale of rights entitlements are not equity shares as s. 62 of Companies Act, 2013-rights entitlement are covered under the provisions of art. 13(6) and, therefore, cannot be subjected to tax in India but is taxable in the resident State of the assessee i.e., Ireland-DTAA-India-Ireland. [S.90, Art. 13(6), Companies Act, 2013, S.62,]
Leave a Reply