As India continues making rapid strides in economic growth, Indian residents have increasingly turned their gaze to acquire and hold investments overseas. Often, the overseas investments are held through corporate structures set up in or outside India. In a significant ruling, the Income Tax Appellate Tribunal has held that income arising to a British Virgin Islands (“BVI”) company on overseas assets is not taxable in the hands of Indian resident shareholders of such a company. The action of tax authorities to lift the corporate veil of the company and deem the Indian resident shareholders as the ‘beneficial owners’ of the assets owned by the BVI company has been rejected. Noting that the Indian resident individuals subscribed to the shares of BVI company from their tax paid income and in compliance with the Liberalised Remittance Scheme of the Reserve Bank of India, the Tribunal concluded that there was no basis to lift the corporate veil.