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Wednesday, Jul 09, 2003

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Govt denies sops to Arvind Mills venture with Mauritius co

Ambarish Mukherjee


THE Union Government has denied tax concessions applicable under the Indo-Mauritius Double Tax Avoidance Agreement to the proposed joint venture between the Lalbhai group flagship Arvind Mills and Ganesha Ltd, a Mauritius-based overseas corporate body (OCB).

The Foreign Investment Promotion Board, following recommendations by the Central Board of Direct Taxes (CBDT), has said that since the OCB, Ganesha Ltd, is 100 per cent held by the US-based Mujrani Group owned by Mrs Gunni Mujrani, a resident of the UK, the proposal amounts to an instance of "treaty shopping" to avoid income-tax liability.

The company had sought FIPB permission to set up the joint venture company for undertaking wholesale export and import of readymade apparels. According to the plans, both the partners will have a 50 per cent stake each in the proposed joint venture which will undertake manufacturing and toll manufacturing of all types of textile garments and clothing accessories for export and import. The company, in its communication to the Government, had committed annual exports worth $5 million, official sources said. The CBDT pointed out that in case the Mauritius outfit sells its share in the Indian joint venture company, there will be no capital gains tax.

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