Union of India v. Azadi Bachao Andolan

[2003] 263 ITR 706 (SC)(2004) 10 SCC 1

Date of order: 7 October 2003

Appellant: Union of India

Respondent: Azadi Bachao Andolan

In favour of: Assessee

Legislation referred / considered

Section 90 (agreement with foreign countries) India–Mauritius DTAA

Headnote — editorial summary

Catchwords: DTAA override; India–Mauritius treaty; Tax Residency Certificate; treaty shopping

The Supreme Court upheld the India–Mauritius treaty and CBDT Circular 789: a Tax Residency Certificate is sufficient evidence of residence, and a DTAA overrides the Act where it is more beneficial.

Judgment

What it decided

Treaty benefits under the India–Mauritius DTAA could not be denied to Mauritius-resident investors holding a valid Tax Residency Certificate. A DTAA (Section 90) prevails over the Income-tax Act where more beneficial, and 'treaty shopping' is not per se impermissible — it is a matter for the treaty partners to address.

Why it matters

The bedrock of DTAA-based planning and foreign investment into India for two decades — TRC-based treaty relief, and the primacy of treaties.

Current status

Later tempered by the 2016 protocol (source-based capital-gains taxation), GAAR, the Principal Purpose Test and limitation-of-benefits clauses — but the core principle (treaty override; TRC relevance) endures.

Status

✔ Good law — followed, not overruled

Verified against later citations. citator soon

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