mumbai an appellate tax tribunal has ordered capital gains tax exemption for a mauritius company which wanted to sell stake in an indian company to another overseas firm the authority for advance ruling aar a quasijudicial body which gives advice on tax matters in advance of the actual transaction has said that the exemption holds good even if the company is set up in mauritius for the purpose of avoiding capital gains tax in the country the order was given on november 14 in an application filed by ardex investment mauritius ardex wants to sell its stake in indian firm ardex endura india to germanys ardex beteiligungs the aars observation was based on the supreme courts decision in the azadi bachao andolan case in which the apex court held that a certificate of residence in mauritius is a ground for claiming the benefits under the indiamauritius tax treaty the it department said that indiamauritius tax treaty would not be applicable in this case as the mauritius company was set up for the exclusive purpose of avoiding capital gains tax the department pointed that ardex investments does not have any income of any type and is a subsidiary of the ukbased ardex holdings prima facie it appeared that the sole purpose for which the company was brought into existence was to hold the shares of the indian company on behalf of its parent company ardex holdings the source of all funds of the applicant was the holding company the it department said but the aar did not agree with the view at worst it could be said to be the case of treaty shopping even then in the light of the decision of the supreme court in azadi bachao andolan no further esquire on the question iswarranted or justified