The way a sham number placed a UAE fund in tax limbo

MUMBAI: What does a numeral represent? Abu Dhabi Investment Authority entered a fictitious mobile number ‘9999999999’ in order to transmit its income tax return to the portal. As a result, I-T authorities began to question the legitimacy of this organization.

As a result, the commissioner (appeals) maintained the 20% tax rate on interest income of approximately Rs 365 crore that the entity earned in FY19 from Indian debt securities.

Due to the exempt status of dividend income in the hands of shareholders, the nearly Rs 700 crore dividend was not contested.

As a result, ADIA initiated the process of appealing to the Income Tax Appellate Tribunal. Article 24 of the India-UAE tax treaty granted it tax exemption in India on account of its status as a “government” entity. The ITAT affirmed the tax exemption despite disapproving of the actions taken by the subordinate tax authorities.
Chartered accountants highlight that a considerable proportion of non-residents have entered this ten-digit numerical code to transmit their I-T returns in the absence of a mobile number in India. Additionally, other non-residents who have or may be subject to tax demands on account of the fictitious mobile number they entered will benefit from this ITAT order.
The ITAT panel emphasized in its ruling that the denial of the tax treaty benefit was based on a “extremely flimsy ground.” The rationale provided by the commissioner (appeals) is that the Truecaller application identified the mobile number ‘9999999999’ as fraudulent. Based on this information, the commissioner (of appeals) deduced that ADIA is a fraudulent organization; instead, it concluded that it does not belong to the government of Abu Dhabi.
“Once all other information has been presented, and if that is in doubt, he should have verified the PAN and the address provided in the return to determine whether the company is owned by the Abu Dhabi government,” the ITAT bench stated. If he had been unable to substantiate, he ought to have questioned the assessee (ADIA)… It is rather unexpected that the initial appellate authority (also known as the appellate commissioner) would reject the government-owned authority’s status based solely on a Truecaller app lookup of the mobile number. This methodology should be disapproved of and is susceptible to being disregarded at the preliminary stage.