THE HONBLE SRI JUSTICE SANJAY KUMAR AND HONBLE SRI JUSTICE U.DURGA PRASAD RAO I.T.T.A. NOS. 55 OF 2014 and batch 16-06-2017 Director of Income-tax (International Taxation), Hyderabad .. Appellant M/s. Vanenberg Facilities BV .. Respondent Counsel for Appellants in : Ms. K.Mamata ITTA Nos.55 and 71 of 2014 and Choudary Respondents in WP No.41469 of 2015 ^Counsel for Respondents in Mr. Nishanth Thakkar ITTA Nos.55 and 71 of 2014 and and Mr. T.Bala Mohan Reddy Petitioner in WP No.41469 of 2015 Head Note: ? CASES REFERRED: 1. [2007] 107 ITD 367 (Ahmedabad) 2. (2012) 6 SCC 613 3. ITA No.4672/Mum/2003 and batch dated 08.02.2012 of Income Tax Appellate Tribunal, Mumbai Bench J, Mumbai. 4. [2008] 115 ITD 167 (Mumbai) 5. [2010] 122 ITD 216 (Mumbai) 6. [2014] 365 ITR 560 (Bombay) 7. [2011] 133 ITD 543 (Mumbai) 8. ITA Nos.692 and 693 of 2012 dated 22.08.2014 9. [2002] 256 ITR 1 (Delhi) 10. [2010] 320 ITR 561 (SC) 11. 2006 (3) ARBLR 159 (Delhi) 12. 2008 (3) ARBLR 283 (Delhi) 13. AIR 1979 SC 381 14. [2002] 256 ITR 395 (Bombay) 15. [2012] 204 Taxman 363 (Delhi) 16. [2001] 248 ITR 447 (Patna) 17. [2010] 325 ITR 139 (Karnataka) 18. Income Tax Appeal No.2277 of 2013 dated 01.02.2016 19. [2012] 344 ITR 37 (Delhi) 20. [2015] 362 ITR 272 (Delhi) 21. AIR 1963 SC 677 22. [1993] 201 ITR 674 (Karnataka) 23. [2009] 309 ITR 434 (SC) 24. [1967] 63 ITR 232 (SC) 25. [2013] 219 Taxman 19 (Delhi) 26. [2010] 323 ITR 130 (Delhi) 27. (2000) 2 SCC 718 28. (2007) 15 SCC 401 HONBLE SRI JUSTICE SANJAY KUMAR AND HONBLE SRI JUSTICE U.DURGA PRASAD RAO I.T.T.A. NOS.55 AND 71 OF 2014 AND W.P.NO.41469 OF 2015 COMMON JUDGMENT (Per Honble Sri Justice Sanjay Kumar) two appeals by revenue under Section 260A of Income-tax Act, 1961 (for brevity, Act) arise out of common order dated 15.03.2013 passed by Income Tax Appellate Tribunal, Bench, Hyderabad (hereinafter, Tribunal), allowing I.T.A.Nos.739 and 2118/Hyd/2011 filed by Vanenburg Facilities B.V. (hereinafter, assessee company) pertaining to assessment year 2005-06. I.T.T.A.No.55 of 2014 relates to I.T.A.No.2118/Hyd/2011, while I.T.T.A.No.71 of 2014 arises out of I.T.A.No.739/Hyd/2011. W.P.No.41469 of 2015 was filed by assessee company seeking direction to revenue to refund amount of Rs.49,00,73,615/- along with future interest pursuant to aforestated common order dated 15.03.2013 and consequential order dated 28.05.2013 of Assistant Director of Income Tax (International Taxation)-II, Hyderabad. assessee company is incorporated in Kingdom of Netherlands. It has its registered office at Vanenburgerallee, Putten of Netherlands, and is resident of Netherlands as per Article 4 of Convention between Republic of India and Kingdom of Netherlands for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital (hereinafter, DTAA). assessee company made investments in equity share capital of Indian company, Baan IT Park India Pvt Ltd., which was incorporated on 02.04.1997. assessee company invested, in all, sum of Rs.55,95,12,000/- in said company from 14.08.1997 to 23.03.2000. Indian company was renamed as Vanenburg IT Park India Private Limited (hereinafter, VITP Limited) on 13.12.1999 and became wholly owned subsidiary of assessee company. assessee company made aforestated investments in Indian company basing on approval dated 12.06.1997 granted by Foreign Investment Promotion Board, Government of India. VITP Limited commenced business of developing, maintaining and operating industrial park at Madhapur in Hyderabad after obtaining requisite approvals from Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Government of India. first phase of project was completed in June, 2000, and second phase in August, 2002. During financial year 2004-05, assessee company sold all its shares in VITP Limited to Ascendas Property (Fund) India Pte Limited (hereinafter, Ascendas) for consideration of Rs.224.50 crore in terms of Share Purchase Agreement dated 17.12.2004. However, Memorandum of Understanding dated 20.09.2004 entered into earlier by assessee company with Ascendas mentioned sale consideration as Rs.228.00 crore. In any event, assessee company earned income by way of capital gains upon sale of aforestated shares. Before payment of entire sale consideration and during pendency of application of assessee company under Section 197 of Act, order dated 03.01.2005 was passed by revenue under Section 195(2) of Act directing Ascendas to deduct tax at source from remittance of sale consideration and to deposit same. Consequently, sum of Rs.35.24 crore was withheld by Ascendas on 02.03.2005 from payment of Rs.224.50 crore and deposited with revenue. Further, as sum of Rs.49,43,750/- was paid to assessee company by Ascendas towards interest on delayed payment of sale consideration, sum of Rs.20,67,476/- was deposited by Ascendas with revenue on 22.03.2005 as tax deducted at source thereon. assessee company filed its return of income claiming refund of entire amount deducted towards tax at source and deposited into Government account. case of assessee company before Assistant Director of Income Tax (International Taxation)-II, Hyderabad, Assessing Officer (hereinafter, AO), was that transaction giving rise to aforestated capital gains was not taxable in India as it was covered by Article 13 of DTAA, which would override local law, in terms of Section 90 of Act. In alternative, assessee company claimed that as VITP Limited was registered under Section 10(23G) of Act, capital gains arising from transfer of its shares were exempt from taxation under Act. As regards taxability of interest paid to it by Ascendas, assessee company claimed that payment and receipt thereof was in Netherlands and could not therefore be said to have accrued or arisen through or from any property in India or from any asset or source of income in India or through transfer of capital asset situated in India. By assessment order dated 25.02.2008 under Section 143(3) of Act, AO rejected all three claims of assessee company. As regards first claim relating to exemption claimed under DTAA, AO examined Article 13 thereof. Article 13 of DTAA reads as under: CAPITAL GAINS 1. Gains derived by resident of one of States from alienation of immovable property referred to in Article 6 and situated in other State may be taxed in that other State. 2. Gains from alienation of movable property forming part of business property of permanent establishment which enterprise of one of States has in other State or of movable property pertaining to fixed base available to resident of one of States in other State for purpose of performing independent personal services, including such gains from alienation of such permanent establishment (alone or with whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gains from alienation of ships or aircraft operated in international traffic or movable property pertaining to operation of such ships or aircraft, shall be taxable only in State in which place of effective management of enterprise is situated. For purposes of this paragraph, provisions of paragraph 3 of Article 8A shall apply. 4. Gains derived by resident of one of States from alienation of shares (other than shares quoted on approved stock exchange) forming part of substantial interest in capital stock of company which is resident of other State, value of which shares is derived principally from immovable property situated in that other State other than property in which business of company was carried on, may be taxed in that other State. substantial interest exists when resident owns 25 per cent or more of shares of capital stock of company. 5. Gains from alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in State of which alienator is resident. However, gains from alienation of shares issued by company resident in other State which shares form part of at least 10 per cent interest in capital stock of that company, may be taxed in that other State if alienation takes place to resident of that other State. However, such gains shall remain taxable only in State of which alienator is resident if such gains are realised in course of corporate organization, reorganization, amalgamation, division or similar transaction, and buyer or seller owns at least 10 per cent of capital of other. 6. provisions of paragraph 3 shall not affect right of each of States to levy according to its own law at tax on gains from alienation of shares or jouissance rights in company, capital of which is wholly or partly divided into shares and which under laws of that State is resident of that State, derived by individual who is resident of other State and has been resident of first-mentioned State in course of last five years preceding alienation of shares or jouissance rights. claim of assessee company was that Article 13(4) and Article 13(5) of DTAA dealt specifically with capital gains arising from transfer of shares and therefore, unless transaction fell within inclusive clauses therein, it could not be taxed in India. assessee company claimed that in light of specific provisions made for capital gains arising out of transfer of shares in Articles 13(4) and 13(5), same would override general provisions in other paragraphs of Article 13. While agreeing with this latter proposition, AO opined that in present case issue related to taxability of capital gains arising from alienation of shares, value of which was principally derived from immovable property used in business of such company, whereas Article 13(4) of DTAA dealt with taxability of gains arising from alienation of company shares, value of which was principally derived from immovable property other than that used in business of such company. AO further observed that there was no dispute regarding non-applicability of Article 13(4), which provided for taxation in India of capital gains in respect of transfer of shares where value mainly comprised non-business immovable property located in India. AO further observed that in case value of transferred shares comprised mainly business-purpose immovable property located in India, then Article 13(4) would not be applicable and for deciding taxability of such capital gains, other paragraphs of Article 13 had to be examined. AO categorically observed that provisions of Article 13(4) of DTAA were not applicable to present facts and that Article 13(5) of DTAA, being residuary clause, would be applicable only if capital gains were not taxable under any other paragraph of Article 13. Holding so, AO opined that Article 13(1), relating to capital gains arising from alienation of immovable property referred to in Article 6 of DTAA, would be applicable. Referring to Article 6, AO observed that immovable property thereunder was to have same meaning which it would have under law of State in which property in question is situated. AO then referred to Section 2(47) and Section 269UA(d) of Act and on strength of these provisions, she concluded that shares of VITP Limited partake character of immovable property under Act and, therefore, capital gains arising from alienation of such shares are chargeable to tax in India under Article 13(1) of DTAA. Coming to second claim of assessee company, AO found that shares in question were transferred on 02.03.2005, long before approval and notification of VITP Limited under Section 10(23G) of Act on 09.12.2005. Though this approval was granted with retrospective effect from 01.04.2002, AO observed that as investments made by assessee company in VITP Limited were between August, 1997 and March, 2000, it could not claim exemption under Section 10(23G) of Act. Further, she found that, to claim benefit of Section 10(23G) of Act, concern has to be notified under Section 80-IA(4)(iii) of Act, but industrial parks were included in ambit of infrastructure facility under Section 80-IA(12)(ca) only in year 2000, relevant to assessment year 2000-01. AO therefore concluded that any investment made in VITP Limited prior to 01.04.2002 would not be eligible for exemption under Section 10(23G) of Act. She further held that benefit under Section 10(23G) was for attracting further investment in infrastructure sector and thereby, any further investments in old projects were entitled to get benefit thereunder. She therefore limited applicability of exemption under Section 10(23G) to further investments in infrastructure sector and not to past investments. Referring to decision of another Bench of Tribunal in Vbc Ferro Alloys Ltd. v. Assistant Commissioner of Income- Tax, Circle 3(4), Hyderabad , AO stated that same was not accepted by revenue as appeal was pending before High Court and refused to apply ratio laid down therein. Similarly, reliance placed by assessee company on Circular No.772/1998 dated 23.12.1998 was rejected on ground that investment should have been made after 01.04.1997, being date of insertion of Section 10(23G) in statute, but prior to 01.06.1998 in specified infrastructure facility and as industrial parks were not covered under definition of infrastructure facility at that point of time, circular did not come to aid of assessee company. She also rejected argument of assessee company that Section 10(23G) of Act would apply with reference to arising of capital gain and not date of making of investment, for availing exemption thereunder. She held that it was point of investment which would determine availability of benefit under Section 10(23G) and not point of arising of income. In effect, AO held that capital gains arising from sale of shares of VITP Limited were chargeable to tax in India under Article 13(1) of DTAA and such gains were not exempt from taxation under Section 10(23G) of Act. As regards last limb of assessee companys claim with regard to non-taxability of interest, AO opined that interest arose through transaction involving sale of capital asset situated in India and would therefore be deemed to have accrued or arisen in India under Section 9(1)(v) of Act. She accordingly determined income from capital gains at Rs.156,93,64,751.27, taking sale consideration as Rs.224.50 crore and upon deducting acquisition cost (Rs.59,95,12,000/-) and expenditure incurred in connection with transfer (Rs.5,27,13,857.87). total tax payable was quantified at Rs.32,86,48,544/- and after adjusting tax deducted at source, viz., Rs.35,44,67,476/-, she found Rs.2,58,18,932/- to be refundable to assessee company. While so, Deputy Director of Income Tax (International Taxation)-II, Hyderabad, reopened aforestated assessment under Section 147 of Act. By draft assessment order dated 29.12.2010, he opined that sale consideration for transfer of shares in VITP Limited should be taken as Rs.228.00 crore and not Rs.224.50 crore, as assessee company could not satisfactorily explain reason for reduction in share value. Further, he directed reduction of cost of acquisition to Rs.55,95,12,000/- and expenditure incurred towards transfer to Rs.4,09,48,050/-, as expenditure claimed during earlier years had already been debited to profit & loss account of those years. He calculated tax on interest income at 40%, treating it as income from other sources. He accordingly worked out capital gains at Rs.167,95,39,950/- and held assessee company liable to pay sum of Rs.3,37,89,697/-. Aggrieved by assessment order dated 25.02.2008 under Section 143(3) of Act, assessee company filed appeal in I.T.A.No.0078/AC(IT)-II/CIT(A)-V/2010-11 before Commissioner of Income Tax (Appeals)-V, Hyderabad (hereinafter, CIT(A)). As regards draft assessment order dated 29.12.2010 under Section 147 of Act, assessee company raised objections before Dispute Resolution Panel (DRP), Hyderabad. assessee companys appeal was dismissed by CIT(A) by order dated 25.03.2011. issues for decision were framed by CIT(A) as under: (1) Whether transaction in question, i.e., sale of shares of Indian Subsidiary to Singapore based company was in principle taxable in India or not (2) If it is taxable, then does it fall under any of clauses of DTAA between India and Netherlands (3) In case, taxability is still determined then what is applicability of Section 10(23) in this case On first issue, CIT(A) held that transaction, being sale of Indian asset, was taxable in India. As regards second issue, CIT(A) affirmed finding of AO that Article 13(1) of DTAA would be applicable in terms of definition of immovable property in Section 269UA of Act and other Indian laws. He observed that he had no hesitation in agreeing with AO that transaction in question fell within purview of Article 13(1) of DTAA and capital gains arising out of transfer of shares in question were taxable in India. As regards second issue, he agreed with AO that Section 10(23G) of Act would not come to aid of assessee company. He rejected applicability of law laid down in VBC FERRO ALLOYS LTD.1 on ground that said judgment did not relate to specific facts of appeal before him and could not therefore be applied. He observed that approval of Central Board of Direct Taxes was essential ingredient to claim exemption under Section 10(23G) of Act and agreed with AO that such exemption could not be availed by assessee company as VITP Limited was granted statutory approvals long after investments were made therein by assessee company. Dealing with last ground in appeal relating to interest income, CIT(A) held that interest payment could not be divorced from original payment, as both pertained to same transaction, and accordingly upheld addition made by AO in that regard. Upon objections raised by assessee company, DRP issued directions under Section 144C(5) of Act on 20.09.2011. While upholding reopening of assessment under Section 147 of Act, DRP found that sale consideration could not be taken as Rs.228.00 crore when actual payment was only Rs.224.50 crore, in terms of Share Purchase Agreement. DRP rejected objection of assessee company with regard to deduction of expenditure incurred during earlier years. As regards charging of tax at 40% on interest income, DRP directed reassessment by AO by applying relevant provisions. AO was further directed to charge interest under Section 234D only on refund, if any, under Section 143(1) and not on refund under Section 143(3). objections of assessee company were thus partly accepted. Aggrieved by dismissal of its appeal by CIT(A) vide order dated 25.03.2011, assessee company filed further appeal in I.T.A.No.739/Hyd/2011 before Tribunal. It also filed appeal in I.T.A.No.2118/Hyd/2011 in relation to reopening of assessment under Section 147 of Act and directions given by DRP, Hyderabad, upon such reassessment. Both these appeals were disposed of by common order dated 15.03.2013 passed by Tribunal. Perusal thereof reflects that, having disposed of I.T.A.No.739/Hyd/2011 on merits, Tribunal opined that there was no need to consider issues in I.T.A.No.2118/Hyd/2011 and allowed said appeal for statistical purposes. Dealing with substantial appeal in I.T.A.No.739/ Hyd/2011, Tribunal observed that finding of AO, confirmed in appeal, that Article 13(1) of DTAA would have application to transaction in question was unsustainable. Considering scope of Section 269UA(d) of Act and definition of transfer under Section 2(47) of Act, Tribunal concluded that definitions of immovable property under various provisions of Act differed and definition under Section 269UD was only for specific purpose. Tribunal therefore opined that said definition could not be held to be law of State under Article 6 of DTAA. Further, Tribunal held that share in company could not be considered to be immovable property in terms of law laid down by Supreme Court in Vodafone International Holdings B.V. v. Union of India . Tribunal also referred to orders passed by Authority on Advance Rulings relating to DTAA and concluded that assessee company had not sold immovable property or any rights directly attached to immovable property. In effect, Tribunal held Article 13(1) of DTAA to be inapplicable. As Article 13(4) could not be invoked because immovable property of VITP Limited was used in its business, Tribunal held that only provision which could be invoked in circumstances was Article 13(5). As inclusive clause therein, which would make transaction in relation to sale of shares taxable in India, did not apply, Tribunal observed that residuary paragraph to effect that gains from alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in State where alienator is resident, would apply. Tribunal held that as assessee company sold shares in Indian company which had business property, Article 13(4) was not applicable and as assessee company did not sell immovable property or any rights in immovable property in which shareholders enjoyed ownership as contemplated in Section 269UA(d) of Act, Article 13(1) was not applicable. Therefore, assessee company was held entitled, under Article 13(5) of DTAA, to exemption from taxation of its capital gains in India as same were taxable in Netherlands. Dealing with alternate claim of assessee company that it would be entitled to exemption under Section 10(23G) of Act, Tribunal rejected finding of AO that investments made prior to 01-04-2002 by assessee company were not eligible for exemption thereunder. Tribunal pointed out that Act did not provide that such exemption would be applicable only for further investments. Referring to objective underlying introduction of this statutory provision, Tribunal observed that provision was extended benefit for attracting investments in infrastructure sector and not for attracting further investments in existing old infrastructure projects. Tribunal observed that Central Government had formulated Industrial Park Scheme, 1999, notified under SO No.193(E) dated 30.03.1999 and made operational from 1997 itself, for providing tax exemption under Section 80-IA of Act for setting up industrial parks for period beginning from 01.04.1997. Reference was made to amendment of Section 80-IA(4)(iii) of Act, including industrial parks notified by Central Government in accordance with scheme framed and notified for period beginning on 01.04.1997 and ending on 31.03.2002, and Tribunal observed that VITP Limited was granted approval by Central Government on 16.09.1999 under said scheme for setting up industrial park. Investment by assessee company in VITP Limited was therefore held to qualify for exemption under Section 10(23G). Referring to view taken by co-ordinate Bench of Tribunal in VBC FERRO ALLOYS LTD.1, Tribunal observed that AO and CIT(A) ought not to have denied relief pursuant to aforestated judgment merely on ground that same was not to liking of revenue. Reference was made to judgment of Mumbai Tribunal in Crompton Greaves Limited v. Joint Commissioner Of Income-Tax, Circle 6(2), Mumbai , which followed VBC FERRO ALLOYS LTD.1, and Tribunal held that AO and CIT(A) erred in not extending exemption provided under statute to assessee company on ground that investments made prior to 01.04.2002 would not be eligible therefor. Tribunal therefore upheld assessee companys claim that its capital gains were exempt from taxation in India, on both counts, i.e., by virtue of DTAA as well as Section 10(23G) of Act. Considering taxability of interest paid by Ascendas to assessee company, Tribunal disagreed with opinion of AO and CIT(A) in this regard. Tribunal found that Section 9(1)(v) of Act had no applicability and therefore, interest could not be said to have accrued or arisen or deemed to have accrued or arisen in India. Tribunal accordingly held that interest paid by non-resident to assessee company abroad was ineligible to be brought to tax under Section 9 of Act. opinion of AO that this interest was paid on account of transaction involving sale of capital asset in India was not accepted by Tribunal as said interest was paid by Ascendas to compensate for delay in remitting sale consideration and it could not be considered to be part of sale consideration. Tribunal further opined that even if it were to be considered as part of sale consideration, it would be exempt under DTAA and therefore, either way, interest received by assessee company abroad from non-resident could not be brought to tax in India. In light of these findings, Tribunal opined that there was no need to consider issues raised in I.T.A.No.2118/ Hyd/2011 relating to reopening of assessment under Section 147 of Act and directions of DRP on such reassessment, as they had become academic in nature. appeal was accordingly allowed for statistical purposes. It is against allowing of these two appeals that present ITTAs were filed by revenue. In I.T.T.A.No.55 of 2014, revenue framed following substantial question of law for consideration: Whether, on facts and circumstances of case, Honble ITAT was correct in allowing appeal for statistical purposes even without considering on merits grounds so raised This appeal is yet to be admitted. I.T.T.A.No.71 of 2014 was admitted on 20.02.2014 for consideration of following substantial questions of law: 1. Whether on facts and circumstances of case, Honble Income Tax Appellate Tribunal was correct in interpreting Article 13(1) and Article 13(4) of India-Netherlands DTAA, as giving rights to Netherlands and not to source country, India, where capital gains arise/accrue to assessee 2. Whether on facts and circumstances of case, Honble Income Tax Appellate Tribunal was correct in interpreting conditions laid out in Section 10(23G) of Income Tax Act, 1961, by stating that approval from Central Government as brought out in Finance Act, 1998 and clarified in Circular No. 772 of 1998, dated 23.12.1998, is not necessary at time of bringing in investment, to be eligible for exemption under section 10(23G) 3. Whether on facts and circumstances of case, Honble Income Tax Appellate Tribunal was correct in holding that interest paid by purchaser on account of delayed payment of sale consideration does not accrue/arise or does not deem to accrue/arise in India or does not partake character of sale consideration itself Heard Ms. K.Mamata Choudary, learned senior standing counsel for revenue, and Sri Nishanth Thakkar, learned counsel representing Sri T.Bala Mohan Reddy, learned counsel for assessee company. Sri Nishanth Thakkar, learned counsel, raised preliminary objection as to maintainability of revenues appeal in I.T.T.A.No.71 of 2014. He would contend that it is not open to revenue to now claim that Article 13(4) of DTAA would have application as AO, and thereafter, CIT(A) specifically held that Article 13(4) of DTAA had no application to transaction in question. He would further contend that once Tribunal disagreed with conclusion of AO and CIT(A) that Article 13(1) of DTAA had application to transaction, revenue necessarily has to limit its appeal to this aspect of matter and could not now claim that Article 13(4) of DTAA could be invoked to bring transaction within Indian taxation regime. Learned counsel also advanced various contentions on merits of matter, including applicability of Section 10(23G) of Act to case on hand. However, as preliminary issue raised by him goes to very maintainability of this appeal, we deem it appropriate to consider same at threshold. At outset, it may be noticed that Article 13(4) of DTAA is in two parts. Firstly, it states that gains derived by resident of one of States from alienation of shares, other than shares quoted on approved stock exchange, forming substantial interest (25%) in capital stock of company which is resident of other State, value of which shares is derived principally from immovable property situated in that other State, would be taxed in that other State. This is inclusive clause whereby State in which property is situated gains ascendance. exclusionary clause however states that in event value of such shares is derived principally from immovable property in which business of company is carried on, capital gains arising from sale thereof would not be taxed in State where property is situated. Significantly, under show-cause notice dated 23.04.2007, while calling upon assessee company to furnish its reply as regards exemption claimed by it under DTAA, AO stated as under: VITP is engaged in business of providing infrastructure facilities for software development companies under STP scheme and as part of pursuit of this object VITP has established and value of shares of VITP is derived principally from said infrastructure facilities of Software Park which are leased out to and used by 100% EOU software companies and thus same cannot be said to be property in which business of VITP is carried on, though said Software Park is business asset of VITP. And since capital gains in question arise from sale of shares of VITP, principal value of which is derived not from immovable property in which business of VITP is carried on, same are chargeable to tax in India as per DTAA. Hence, your claim that capital gains are not chargeable to tax in India under Income-tax Act, 1961 is without any merit. import of this notice, therefore, was that inclusive clause of Article 13(4) of DTAA would apply, making capital gains earned by assessee company taxable in India. In its reply dated 03.05.2007, assessee company stated that under Article 13(4) of DTAA, capital gains arising from sale of shares of Indian company would be liable to tax in India only if value of such shares is derived primarily from immovable property held by such Indian company, other than property in which its business is carried on. It pointed out that VITP Limited was engaged in business of providing infrastructure facilities for software development companies under STP scheme and pursuant thereto, value of its shares was derived principally from said infrastructure facilities/software park which were leased out to and used by 100% EOU software companies. assessee company therefore asserted that immovable property owned by VITP Limited was used for purpose of its business and therefore, value of its shares was derived principally from said immovable property. capital gains arising from sale of such shares was therefore claimed to be exempt as per exclusionary clause in Article 13(4) of DTAA. assessment order dated 25.02.2008 reflects that this explanation of assessee company found favour with AO. This is evident from fact that AO observed, time and again, that there was no dispute regarding non-applicability of Article 13(4), which merely provided for taxation in India of capital gains in respect of transfer of shares whose value mainly comprised non-business immovable property located in India and that provisions of Article 13(4) were therefore not applicable to present facts. Having opined so, AO went on to hold that such transfer of shares would fall within Article 13(1) of DTAA as shares partake character of immovable property. Basing on initial interpretation of Article 13(4) by AO and change in her views, after considering reply of assessee company, Sri Nishanth Thakkar, learned counsel, would contend that once said changed view was confirmed in appeal by CIT(A), it was not open to Director of Income-tax, (International Taxation), Hyderabad, appellant in this appeal, to urge argument which would result in varying said finding in assessment order which was confirmed in appeal. Learned counsel would contend that permitting him to do so at this stage would be nothing short of allowing him to exercise revisionary jurisdiction under Section 263 of Act. Learned counsel would point out that same is barred by law of limitation as provision itself indicates that such power could be exercised only within two years from end of financial year in which order was passed. Learned counsel would state that statutory provisions which permit varying findings in assessment order are: (i) Section 147, (ii) Section 154 and (iii) Section 251. As AO had taken conscious decision that Article 13(4) had no application to present case, reversing her initial interpretation of Article 13(4) as set out in notice dated 23.04.2007, learned counsel would assert that neither Section 147 relating to reopening assessment nor Section 154 relating to rectification of mistakes had any role to play. Learned counsel would point out that under Explanation to Section 251(2), CIT(A) was empowered to consider and decide any matter arising out of proceedings in which order appealed against was passed, notwithstanding that such matter was not raised before him. Learned counsel would further point out that under Section 250(1) of Act, AO was given notice of appeal to be heard by CIT(A) and had right to raise this issue, if any doubt was entertained by AO as regards applicability of Article 13(4) of DTAA to present case. He would therefore contend that AO and CIT(A) had ample opportunity to seek to undo finding as regards non-applicability of Article 13(4) of DTAA to transaction in question but they failed to do so. It may be noticed that even in report submitted to CIT(A), AO reiterated that, by transferring shares held in VITP Limited to Ascendas, assessee company transferred its controlling rights and rights of enjoyment in respect of immovable property situated in India, whereby Article 13(1) of DTAA stood attracted. CIT(A) accordingly restricted his consideration to whether income from transaction in question was taxable within meaning of Article 13(1) of DTAA and, while upholding finding of AO as regards non-applicability of Article 13(4), he confirmed applicability of Article 13(1) of DTAA to transaction. In effect, neither AO nor CIT(A) chose to raise issue as to applicability of Article 13(4) to transaction, in place of Article 13(1) of DTAA. confirmed finding of both was that transaction in question was taxable in India only under Article 13(1) of DTAA. It may also be noted that Section 253(4) of Act empowered AO to file cross-objections before Tribunal after receipt of notice in appeals filed by assessee company and raise issue as to applicability of Article 13(4) of DTAA, if any doubt had been entertained in this regard at least at that stage. However, AO did not choose to do so. It is only before this Court that issue is sought to be raised now, having been dropped by AO after initial notice dated 23.04.2007. No argument in this regard was ever advanced by departmental representative on behalf of revenue before Tribunal. In that view of matter, submission of Sri Nishanth Thakkar, learned counsel, that permitting revenue to argue at this stage that capital gains arising from transaction in question are taxable under Section 13(4) of DTAA would amount to circumventing restrictions built into statute to secure finality to assessment order, merits serious consideration. abundance of case law was cited by Sri Nishanth Thakkar, learned counsel, in support of his contention: In Assistant Commissioner of Income-tax, Circle 16(1), Mumbai v. Prakash L.Shah , Mumbai Bench of Income Tax Appellate Tribunal observed that power to modify assessment order to advantage of revenue, apart from suo motu action by Assessing Officer under Sections 147 or 154, lies only with CIT under Section 263, which cannot be usurped by departmental representative while arguing appeal. Scope of arguments of departmental representative is restricted to support view taken by Assessing Officer and he can strengthen view taken by Assessing Officer from any angle he likes, but cannot bring out altogether different case de hors view of Assessing Officer. It was further observed that his area of arguments is unlimited but within boundary limits marked by Assessing Officer. This judgment attained finality as no appeal was preferred by revenue. In Mahindra & Mahindra Ltd. v. Deputy Commissioner of Income-tax, TDS Range 1(1), Mumbai , Mumbai Bench of Income Tax Appellate Tribunal was dealing with issue as to whether additional ground as to order passed by Assessing Officer being void ab initio as it was barred by limitation could be raised for first time before it. Observing that it is settled legal position that there can be no embargo on any party raising legal ground for first time, provided relevant material for deciding that question already exists on record and no further investigation of facts is required, Mumbai Bench held that question of limitation would go to very jurisdiction and right of assessee to raise additional ground of limitation before it for first time could not be curtailed as it involved question of law and no fresh investigation of facts was called for. additional ground of appeal was therefore admitted for consideration on merits. As regards contention of revenue that double taxation avoidance agreement between India and United Kingdom had no application to payments made by assessee, Bench found that at no stage did Assessing Officer deny that said agreement was not applicable. In such situation, Bench held that it is impermissible for departmental representative to come out with submission contrary to finding of Assessing Officer. Bench observed that it could not permit departmental representative to take contrary stand from one taken by Assessing Officer as he had no jurisdiction to go beyond order passed by Assessing Officer and raise point different from that considered by Assessing Officer or CIT(A). Bench further observed that scope of his arguments was confined to supporting or defending impugned order and departmental representative could not set up altogether different case and allowing him to take up new contention de hors view taken by Assessing Officer would mean that departmental representative was stepping into shoes of CIT exercising jurisdiction under Section 263. In appeal, Bombay High Court in Director of Income-Tax (International Taxation) v. Mahindra & Mahindra Ltd. confirmed this judgment. Significantly, only issue raised before High Court was with regard to limitation aspect and not with regard to power of revenue to raise ground in appeal contrary to assessment order. In Assistant Commissioner of Income-tax, Circle 6(3) v. Maersk Global Service Centre (India) (P.) Ltd. , Mumbai Bench of Income Tax Appellate Tribunal observed that departmental representative has duty to defend order of Assessing Officer while arguing appeal filed by revenue and is fully competent and free to support reasoning of Assessing Officer from any other angle so as to put forward strong case for revenue. Bench however pointed out that there is marked distinction between supporting order of Assessing Officer on one hand and in finding flaws in order of Assessing Officer in attempt to show that Assessing Officer had failed to do what was required to be done by him. Bench observed that, in its considered opinion, if departmental representative was allowed to fill in gaps left by Assessing Officer, it would amount to conferring jurisdiction of CIT under Section 263 upon departmental representative, which is not permitted by statute. Bench therefore concluded that departmental representative could not be allowed to argue contrary to what has been done by Assessing Officer as same is not permissible within framework of statutory provisions. This order was confirmed by Bombay High Court in Commissioner of Income Tax-6, Mumbai v. M/S. Maersk Global Service Centre (I) Pvt. Ltd. . Bombay High Court observed that Income Tax Appellate Tribunal had not allowed revenues representative to travel beyond order of Transfer Pricing Officer and Assessing Officer so as to make out different case and held that it was fully justified in doing so. In Commissioner of Income-Tax v. Kelvinator of India Ltd. , Full Bench of Delhi High Court observed that when Assessing Officer considered matter in detail and view taken is possible one, order cannot be changed by way of exercising jurisdiction for rectification of mistake under Section 154. It was further observed that it is well settled that what cannot be done directly cannot be done indirectly and if Assessing Officer did not possess power of review, he cannot be permitted to achieve said objective by taking recourse to initiating proceeding of reassessment or by way of rectification of mistake. It was further pointed out that in case of this nature, revenue is not without remedy as Section 263 of Act empowered Commissioner to review order which is prejudicial to revenue. This judgment was confirmed by Supreme Court in Commissioner of Income-Tax, Delhi v. Kelvinator of India Ltd. . Therein, Supreme Court observed that reopening of assessment under Section 147 could be done under conditions mentioned therein, i.e., if Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment. Supreme Court further observed that one needs to give schematic interpretation to words reason to believe, failing which, Section 147 would give arbitrary powers to Assessing Officer to reopen assessments on basis of mere change of opinion, which cannot be, per se, reason to reopen. Supreme Court pointed out that one must keep in mind conceptual difference between power to review and power to reassess, and as Assessing Officer has no power of review but only has power to reassess, it must be based on fulfillment of certain preconditions and in garb of reopening assessment, review cannot be permitted to take place. This judgment was cited in context of Assessing Officer himself being bound by his finding that Article 13(4) had no application and, therefore, what could not be done by him could not be achieved indirectly in present appeal. In Morgan Securities And Credits Pvt. Ltd. v. Morepen Laboratories Ltd. , learned Judge of Delhi High Court observed that allowing judgment-debtor to raise objections to Award despite failing to file application under Section 34 of Arbitration and Conciliation Act, 1996 within time, would be to allow him to indirectly do something which he could not do directly. This view was confirmed in appeal by Division Bench of Delhi High Court in Morepen Laboratories Ltd. v. Morgan Securities And Credits Pvt. Ltd. . These judgments are pressed into service in support of contention that it is no longer open to revenue to exercise revisional power under Section 263 of Act after expiry of prescribed limitation period. In Jagir Singh v. Ranbir Singh , Supreme Court was considering whether revisional jurisdiction under Section 397 CrPC could be exercised by High Court. Supreme Court observed that object of Section 397(3) CrPC was to prevent multiple exercises of revisional powers so as to secure finality to order. person aggrieved by order of inferior Criminal Court is given option to approach either Sessions Judge or High Court and once he exercises option, he is precluded from invoking revisional jurisdiction of other authority. This judgment is relied upon to support contention that it is too late in day for revenue to seek to exercise revisional jurisdiction under Section 263 of Act, having failed to do so at appropriate time. Sri Nishanth Thakkar, learned counsel, would further contend that under Section 260A (6) of Act, this Court is empowered to determine any issue which has not been determined by Tribunal or has been wrongly determined by Tribunal. He would point out that as applicability of Article 13(4) of DTAA to transaction was never raised before Tribunal, it cannot be permitted to be raised before this Court for first time in third appeal. Learned counsel would point out that no arguments were advanced by revenue on applicability of Article 13(4) and therefore, Tribunal proceeded on basis that it could not be invoked, as immovable property of Indian company was used in its business, and only considered applicability of Article 13(1). Learned counsel would therefore argue that applicability of Article 13(4) does not arise for consideration out of order under appeal. Reliance in this regard is placed by him upon following precedents: In Commissioner of Income-Tax v. Tata Chemicals Ltd. , Division Bench of Bombay High Court was dealing with contention that though question was not raised before Income Tax Appellate Tribunal, Section 260A(6)(a) of Act empowered High Court to determine any issue which was not determined by such Tribunal. Division Bench observed that careful reading of section would show that High Court can decide only that question which was raised but not determined by such Tribunal and therefore, it is necessary that question sought to be raised ought to have been raised before such Tribunal and then, if it has not determined it, one can say that it has not been determined by such Tribunal and High Court should look into it. On facts, Bench found that issue was not raised before Income Tax Appellate Tribunal and therefore did not choose to dwell on same. In C & C Construction (P.) Ltd. v. Commissioner of Income-tax , Division Bench of Delhi High Court was dealing with issue as to whether contention which was not raised before Income Tax Appellate Tribunal could be decided by High Court by taking recourse to Section 260A(6)(a) of Act. Bench observed that word determined means that issue was not dealt with though it was raised before such Tribunal as word determined presupposes that issue was raised or argued but there was failure on part of such Tribunal in deciding or adjudicating same. Bench further observed that in given case, substantial question of law may arise because of facts and findings recorded by Income Tax Appellate Tribunal, but said issue/question is not determined. In such cases, Bench observed that appeal under Section 260A of Act can be entertained. In Commissioner of Income-tax v. Prabhat Zarda Factory , Division Bench of Patna High Court upheld plea that contention raised before it was never raised by department at any stage, be it before Assessing Officer or Income Tax Appellate Tribunal, and therefore, it was not open to revenue to raise same in appeal. In Davangere Maganur Bassappa v. Income-tax Officer , Division Bench of Karnataka High Court found that ground sought to be raised before it had not been raised by assessee before Income Tax Appellate Tribunal and held that if assessee failed to raise question before said Tribunal, he could not raise it for first time in appeal. In Commissioner of Income-tax Mumbai v. M/S. Kanga & Co. , Division Bench of Bombay High Court observed that it was unable to understand how additional question of law could arise from impugned order of Income Tax Appellate Tribunal, when no foundation had been laid for same before authorities or said Tribunal. Bench observed that question did not arise from order of said Tribunal and therefore, such question could not be urged in appeal under Section 260A of Act. Bench further observed that there are questions of fact which ought to be raised before authorities and in absence thereof, additional question of law sought to be raised by revenue could not be considered. In Commissioner of Income-tax v. Eicher Ltd. , Division Bench of Delhi High Court rejected new contention urged by revenue on ground that no such plea had been taken before Income Tax Appellate Tribunal and entire case was argued on different basis. Bench observed that even before Commissioner (Appeals), matter proceeded on same basis and once no such plea, as was being advanced before it, was taken by department before Commissioner (Appeals) or before Income Tax Appellate Tribunal, it could not be raised for first time in appeal filed under Section 260A of Act. In Commissioner of Income-tax v.Jayshree Gems & Jewellery , Division Bench of Delhi High Court was dealing with disallowance of certain expenses by Assessing Officer. claim for allowing such expenses was upheld by Income Tax Appellate Tribunal. Bench observed that grounds of appeal urged before said Tribunal did not disclose that revenue had ever argued that claim for reduction of these amounts itself evidenced that appellant did not carry on any manufacturing activity. Bench therefore concluded that revenue could not be permitted to urge this new aspect for first time under Section 260A of Act. As applicability of Article 13(4) of DTAA was never put in issue before Tribunal, Sri Nishanth Thakkar, learned counsel, would contend that there was no determination by Tribunal of same, whereby revenue could now ask this Court to sit in appeal over such determination and examine validity thereof. Reliance is placed on Jaswant Sugar Mills Ltd., Meerut v. Lakshmichand in this regard. Therein, Supreme Court observed that expression determination signifies effective expression of opinion which ends controversy or dispute by some authority to whom it is submitted under valid law for disposal and expression order must also have similar meaning, except that it need not end dispute. Sri Nishanth Thakkar, learned counsel, would advert to arguments advanced by departmental representative on behalf of revenue before Tribunal, referred to in paragraph 16 of common order under appeal, and point out that entire emphasis was only on applicability of Article13(1) of DTAA and no arguments whatsoever were urged as to applicability of Article 13(4) thereof. In consequence, he would point out that Tribunal recorded in paragraph 32 of order that since assets of Indian company are immovable property but were used in its business, Article 13(4) cannot be invoked. Learned counsel would therefore contend that as this issue was treated as foregone conclusion, no opportunity was ever given to assessee company to establish, on facts, as to how it would fall within exclusionary part of Article 13(4), whereby capital gains earned by it would not be subject to taxation in India. Learned counsel would further submit that even if Tribunal had determined issue which was not in dispute before it, such determination would be liable to be struck down. He placed reliance on Karnataka State Forest Industries Corpn. Ltd. v. Commissioner of Income-tax, wherein Division Bench of Karnataka High Court held that power of Income Tax Appellate Tribunal in appeal arising under Section 254 can be exercised only in relation to grounds arising in appeal and it cannot go beyond its scope and decide question which did not form subject matter of appeal. In Mcorp Global (P.) Ltd. v. Commissioner of Income-tax., Ghaziabad , Supreme Court, relying on Hukumchand Mills Ltd. v. CIT , reiterated that Income Tax Appellate Tribunal is not authorized to take back benefit granted to assessee by Assessing Officer and that it has no power to enhance assessment. In Ester Industries Ltd. v. Commissioner of Income-tax, Division Bench of Delhi High Court observed that assessee therein, in fourth appeal maintainable only on ground of substantial question of law under Section 260A of Act, could not be allowed to raise contention afresh so as to set ball rolling back once again to Assessing Officer after lapse of several years. In Van Oord Acz India (P.) Ltd. v. Commissioner of Income-tax, Division Bench of Delhi High Court was concerned with plea of assessee that it was not liable to pay any tax in India, plea which had been accepted by income-tax authorities. return filed by assessee was processed under Section 143(a)(i) of Act. But it was sought to be contended by revenue before High Court that there was no determination of issue involved. Bench observed that fact remained that by accepting return as filed, assessee had been refunded tax at source and implication thereof was that it was not liable to pay tax. In case higher authority passes order to contrary, it would be open to authorities to treat assessee as in default but without same, position was that assessee could not be treated as liable to pay any tax. Learned counsel would therefore contend that it is not open to this Court, in exercise of appellate jurisdiction under Section 260A of Act, to do what Tribunal itself could not have done in light of aforestated judgments. He would vigorously contend that it is not open to revenue to now argue that Article 13(4) of DTAA would have application, contrary to findings recorded by AO and CIT(A). Answering aforestated preliminary objections as to maintainability of this appeal, Ms. K.Mamata Choudary, learned senior standing counsel, would contend that Article 13(4) of DTAA would be applicable on facts to present case and in terms thereof, assessee company is liable to be taxed in India. She would assert that interpretation and applicability of correct provision of DTAA is purely question of law and not of fact and could therefore be determined in present appeal. She would point out that Article 13(4) of DTAA was put in issue by assessee company itself right from stage of show-cause notice dated 23.04.2007 and therefore, it cannot be said that issue is being raised for first time. She would point out that by virtue of reopening of assessment under Section 147 of Act, AO could not have introduced Article 13(4) of DTAA as it would amount to change in opinion, which is impermissible in exercise of Section 147 jurisdiction. She would further state that revisional power under Section 263 of Act could not have been exercised as order of AO was not prejudicial to interests of revenue. She would argue that it is well within power of this Court to entertain this issue for consideration in present appeal by exercising power under Section 260A(6) of Act. She would point out that grounds of appeal filed by assessee company before CIT(A) specifically raised this issue, as is evident from paragraph 3 of order dated 25.03.2011 passed by CIT(A). She would also point out that Tribunal took note of contention of AO that subject capital gains were taxable in India under Article 13(1) whereas assessee claimed exemption by virtue of Article 13(4) and (5) of DTAA and contend that it is not open to assessee company to now state that Article 13(4) was never in issue. In response to aforestated contentions of learned senior standing counsel, Sri Nishanth Thakkar, learned counsel, would contend that grounds of appeal filed by assessee company merely asserted that AO erred in law and on facts in applying Article 13(1) of DTAA as provisions of Article 13(4) and Article 13(5) were specifically applicable to case, as they dealt with capital gains arising from alienation of shares. Having considered rival submissions in light of case law cited, we are of opinion that question as to whether applicability of Article 13(4) of DTAA was raised before CIT(A) or Tribunal is only one facet of matter. fact remains that AO, having initially opined that inclusive clause in Article 13(4) of DTAA would be applicable to transaction thereby making it taxable in India, thereafter accepted plea of assessee company that it was not applicable. This acceptance by AO is explicit from assessment order. Having agreed with assessee company on this aspect, AO held that Article 13(1) of DTAA would be applicable to transaction. This finding, which was confirmed in appeal by CIT(A), is now sought to be discarded by revenue. learned senior standing counsel fairly concedes that Article 13(1) was wrongly applied by authorities to transaction and contends that it is Article 13(4) which would have application, as exclusionary clause therein would not apply. record however reflects that this issue was never raised by revenue before Tribunal. That apart, we are at loss to understand as to why revenue did not choose to exercise revisionary power under Section 263 of Act at appropriate time in event this error on part of AO in applying Article 13(1) of DTAA was noticed. It is relevant to note that Section 263 of Act permits revision of any order of Assessing Officer if Principal Commissioner/ Commissioner considers such order to be erroneous in so far as it is prejudicial to interests of revenue. In Malabar Industrial Company Limited v. Commissioner of Income tax, Kerala , Supreme Court held that bare reading of Section 263 made it clear that pre-requisite for exercise of revisional jurisdiction was that order of Assessing Officer should be erroneous in so far as it was prejudicial to interests of revenue. Therefore, revisional authority had to be satisfied that (i) order of Assessing Officer was erroneous and (ii) it was prejudicial to interests of revenue. Supreme Court further observed that phrase prejudicial to interests of revenue has to be read in connection with erroneous order passed by Assessing Officer and in event, Assessing Officer adopted one of courses permissible in law, which had resulted in loss of revenue, or where two views were possible, and Assessing Officer had taken one view with which Commissioner did not agree, it could not be treated as erroneous order prejudicial to interests of revenue, unless view taken by Assessing Officer was unsustainable in law. This view was reiterated in Commissioner of Income tax v. Max India Limited . It is therefore clear that in event order of Assessing Officer is erroneous, being unsustainable in law, it can be revised in exercise of power under Section 263 of Act. In present case, it is fairly conceded by learned senior standing counsel that finding of AO, which was confirmed thereafter in appeal, that Article 13(1) of DTAA would apply to alienation of shares by assessee company treating same as sale of immovable property, was erroneous being contrary to settled legal position, both as regards application of definition of immovable property in Act, as well as legal status of corporate entity when juxtaposed to its shareholders. That being so, it was well within power of Commissioner to exercise jurisdiction under Section 263 of Act at right time so as to set right this misconceived notion of AO. However, no such exercise was undertaken within time. Notwithstanding same, it was still open to CIT(A) to exercise jurisdiction under Explanation to Section 251(2) of Act and set right this wrong. However, neither AO, who did not choose to amend her blunder by raising this issue when called upon to submit report, nor CIT(A), who blindly accepted finding of AO that Article 13(1) of DTAA would govern transaction while approving her finding that Article 13(4) of DTAA had no application, took remedial steps at right time. Even thereafter, it was open to revenue to raise issue before Tribunal by filing cross-objections. Alas, at that stage also, revenue did not choose to wake up. It is only before this Court that issue as to whether transaction in question would fall within Article 13(4) of DTAA was raised, in substantial questions of law framed in grounds of appeal. In effect, revenue now wants to fall back on initial view taken by AO in show-cause notice dated 23.04.2007. Much water has flown under bridge since that date as AO, being satisfied with reply of assessee company under its letter dated 03.05.2007, accepted its plea that exclusionary clause under Article 13(4) would apply to transaction, contrary to her initial view and, thereupon, went on to arrive at misconceived opinion that Article 13(1) of DTAA would be applicable, by treating sale of shares as equivalent to sale of immovable property. Therefore, notwithstanding stray mention of Article 13(4) of DTAA in proceedings before CIT(A) and thereafter, before Tribunal, irrefutable fact remains that AO arrived at considered conclusion that Article 13(4) would not apply to transaction and that it would be taxable in India only under Article 13(1). This finding was confirmed in appeal and was never challenged before Tribunal by way of cross-objections. It is therefore too late in day for revenue to introduce this new element in third appeal before this Court. We are not inclined to agree with learned senior standing counsel for revenue that question as to applicability of Article 13(4) of DTAA would be pure question of law. Whether immovable property from which companys shares principally derived their value was property in which business of company was carried on or not is question of fact. As rightly pointed out by Sri Nishanth Thakkar, learned counsel, this aspect of matter was never put in issue, be it before CIT(A) or before Tribunal. assessee company was therefore never put on notice that it had to tender evidence on this aspect. Without factual finding as to whether immovable property of VITP Limited was property in which its business was carried on, question of applying one or other parts of Article 13(4) at this stage would not arise. In consequence, contention of learned senior standing counsel that interpretation of Article 13(4) of DTAA is purely question of law does not merit acceptance. Therefore, issue of applicability of Article 13(4) of DTAA to subject transaction, so as to make it taxable in India, cannot be permitted to be raised at this late stage. Thus, appeal would necessarily have to be restricted to finding of Tribunal that Article 13(1) of DTAA had no application to transaction. As already pointed out, learned senior standing counsel concedes this position and accepts that finding of Tribunal to this effect is valid and correct. Even otherwise, we are not inclined to disturb this finding of Tribunal. In Vodafone International Holdings B.V.2, Supreme Court pointed out that company is separate legal persona and fact that all its shares are owned by one person has nothing to do with its separate legal existence. This being settled legal position, ridiculous analogy adopted by AO that by virtue of their shareholding in company, shareholders acquire rights in property owned by such company does not withstand judicial scrutiny. Further, AO and CIT(A) failed to note difference between alienation of companys immovable property, falling under Article 13(1) of DTAA, and alienation of companys shares by shareholder, attracting Article 13(4) or (5) thereof. legal distinction between concept of share sale as opposed to asset sale, succinctly summed up by Supreme Court in VODAFONE International Holdings B.V.2 , was completely ignored by AO and CIT(A). Further, AO and CIT(A) erred in equating alienation of companys shares to alienation of its immovable property, by applying ludicrous logic that shares partake character of immovable property. Thus, on both counts, finding of Tribunal does not warrant interference. As learned senior standing counsel fairly concedes this point, we need not belabour further. As we are not inclined to entertain new issue as to applicability of Article 13(4) of DTAA to transaction, so as to make it taxable in India, arguments advanced by both sides as well as case law cited need no further discussion. That being so, as Tribunal rightly held that alienation of shares by assessee company to Ascendas did not fall under Article 13(1) of DTAA and that residuary clause in Article 13(5) thereof would have application, we confirm finding of Tribunal that capital gains earned by assessee company from subject transaction are covered by exemption afforded by Article 13(5) of DTAA and same would therefore not be taxable in India. In light of our aforestated finding, we are not required to go into alternate claim of assessee company that it is also entitled to exemption from taxation under Section 10(23G) of Act. arguments advanced in this regard as well as case law cited are accordingly eschewed from further consideration. last issue is as to whether interest paid to assessee company by Ascendas is taxable in India. finding of AO, as confirmed by CIT(A), was that same was liable to be taxed in India by virtue of Section 9(1)(v) of Act. However, as rightly pointed out by Tribunal, provisions of aforestated section cannot be stretched beyond what has been spelt out therein in clear terms. relevant part of section merely states that income by way of interest payable by person who is non-resident, where such interest is payable in respect of any debt incurred, or moneys borrowed and used, for purposes of business or profession carried on by such person in India, would be deemed to be income accruing or arising in India. On face of it, Section 9(1)(v) has no applicability whatsoever to interest paid to assessee company by Ascendas as there is no evidence of debt being incurred or monies being borrowed for any business purposes in present case. While so, it is contended by Ms. K.Mamata Choudary, learned senior standing counsel, that provision of law which is actually applicable is Section 9(1)(i) and not Section 9(1)(v). This provision reads to effect that all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through transfer of capital asset situated in India would be deemed to have accrued or arisen in India. Ms. K.Mamata Choudary, learned senior standing counsel, would contend that as interest arose out of transaction involving transfer of capital asset in India, it would be taxable in India. She would further contend that Article 11 of DTAA has no application to this payment of interest, as it stood excluded therefrom being penal interest. Per contra, Sri Nishanth Thakkar, learned counsel, would assert that subject payment of interest was not by way of penalty. He would rely on letter dated 15.02.2005 addressed by Ascendas to assessee company. Thereunder, Ascendas referred to Share Purchase Agreement dated 17.12.2004 and closing date recorded therein and stated that, notwithstanding satisfaction or waiver of conditions precedent set forth in Schedule VIII of said agreement, parties had agreed to defer closing date in consideration of payment of interest as follows: Ascendas undertook that it would pay interest at 7% per annum on INR 169.50 crore with effect from 15.02.2005 and same would be payable until completion of transaction. Learned counsel would state that it was by virtue of this agreement between parties to defer closing date that Ascendas undertook to pay interest for such delayed payment of sale consideration. Further, he would rely on Article 11 of DTAA. Article 11(1) states that interest arising in one of States and paid to resident of other State would be taxed in that other State. Therefore, interest arising out of sale of shares of VITP Ltd. but paid to assessee company in Netherlands would normally be taxable in Netherlands. However, Article 11(6) makes it clear that term interest as used in Article means income from debt-claims of every kind, but penalty charges for late payment shall not be regarded as interest for purpose of said Article. Sri Nishanth Thakkar, learned counsel, would contend that as both parties to sale of shares had mutually agreed to defer closing date and Ascendas voluntarily undertook to pay interest for such late payment of sale consideration, same does not partake character of penalty charges. We find merit in this contention. It is significant to note that AO opined that interest arose through transaction involving sale of capital asset situated in India and would therefore be deemed to have accrued or arisen in India. But CIT(A) found in appeal that this interest was inextricably linked to original transaction of sale of shares and therefore, payment of interest arose as part of said transaction. He therefore concluded that payment for sale of shares of VITP Limited involved two components, i.e., original payment and penal payment on account of delay, and therefore interest payment could not be divorced from original payment, as both pertained to same transaction. In effect, CIT(A) held it to be part of sale consideration itself. Tribunal, on other hand, held that Section 9(1)(v) had no application whatsoever and if interest payment was construed to be part of sale consideration, it would stand exempted from taxability in India by virtue of DTAA. Before us, question of law raised in relation to this aspect is that interest either accrued or arose or is deemed to have accrued or arisen in India. Even if so, such interest income would not be taxable in India by virtue of Article 11 of DTAA unless it is covered by exclusion in Article 11(6) thereof. issue, therefore, is whether interest paid qualifies as penalty charges for late payment as per Article 11(6), whereby exemption afforded by said Article would stand excluded. If not, exemption afforded by Article 11(1) would squarely apply and interest paid by Ascendas to assessee company in Netherlands owing to sale of shares of VITP Ltd. would not be taxable in India. Perusal of Share Purchase Agreement dated 17.12.2004 reflects that closing date was stipulated under Clause 4.1 thereof to be no later than 90 days from effective date, being date of execution of agreement. It was further provided that in event conditions precedent under Clause 5 were not fulfilled or not waived by buyer on or before 90 days from effective date or extended date mutually agreed, parties would have right to rescind agreement without any liability towards each other. Significantly, no penalty charges for late payment were envisaged in aforestated agreement. On other hand, agreement contemplated extension of closing date by parties. It appears that closing date, which could be mutually extended, was so extended as recorded in letter dated 15.02.2005 addressed by Ascendas to assessee company. As consideration for such extension of closing date, Ascendas undertook to pay interest at 7% per annum on sale consideration, payment of which stood deferred consequent to extension of closing date. In effect, payment of said interest did not partake nature of penalty charges as it was not penal in character, in any manner. Therefore, Article 11(1) of DTAA applied on all fours, and irrespective of whether such interest accrued or arose or is deemed to have accrued or arisen in India under Section 9(1)(i) of Act, it stood exempted from taxation in India under DTAA. finding of Tribunal to this effect therefore does not warrant interference. questions of law arising in this appeal are answered accordingly. In consequence, I.T.T.A.No.71 of 2014 is dismissed. As we have upheld order of Tribunal holding that capital gains arising out of sale of shares by assessee company of VITP Limited to Ascendas stood exempted from taxation in India under Article 13(5) of DTAA, we agree with Tribunal that directions for reassessment by DRP, subject matter of I.T.T.A.No.55 of 2014, are rendered purely academic and do not warrant further consideration on merits. In consequence, said appeal shall also stand dismissed as no question of law, much less substantial one, is raised therein. W.P.No. 41469 of 2015 was filed by assessee company contending that, pursuant to common order dated 15.03.2013 passed by Tribunal, Assistant Director of Income-tax (International Taxation)-II, Hyderabad, issued order dated 28.05.2013, quantifying amount refundable to it at Rs.49,00,73,615/-, but despite same, Deputy Commissioner of Income Tax-2, International Taxation, Hyderabad, issued letter dated 30.11.2015 informing it that as revenues stay petition in I.T.T.A.No.71 of 2014 was yet to be disposed of by this Court, issue of refund to assessee company was kept on hold. assessee company therefore sought consequential direction to revenue to refund said amount along with further interest. As we have now dismissed I.T.T.A.No.71 of 2014 along with I.T.T.A.No.55 of 2014, there is no reason for revenue to continue to withhold refund payable to assessee company pursuant to order of Tribunal, which now stands confirmed. Be it noted that Section 240 of Act requires Assessing Officer, except as otherwise provided in Act, to refund amount due as result of any order passed in appeal to assessee without his having to make claim in that behalf. revenue shall therefore endeavour to give effect to order passed by Tribunal in I.T.A.No.739/Hyd/2011, which now stands confirmed by virtue of dismissal of I.T.T.A.No.71 of 2014, and refund amount payable in consequence thereof expeditiously and in any event, not later than twelve weeks from date of receipt of copy of this order. To sum up, I.T.T.A.Nos.55 of 2014 and 71 of 2014 are dismissed, confirming common order dated 15.03.2013 of Income Tax Appellate Tribunal, Bench, Hyderabad, in I.T.A.Nos.739/Hyd/2011 and 2118/Hyd/2011. W.P.No.41469 of 2015 is allowed to extent indicated above. In circumstances, parties shall bear their own costs. SANJAY KUMAR, J U.DURGA PRASAD RAO, J 16th JUNE, 2017 Director of Income-tax (International Taxation), Hyderabad v. Vanenberg Facilities BV