Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (7) TMI 1381 - AT - Income TaxDividend Distribution Tax (DDT) - FAA referred to provisions of section 115-O and Article-10 of the DTAA entered into by India and Hungary and held that DDT was not a tax paid by the recipient foreign principal of the assessee, that it was a tax charged on the assessee itself in the status of domestic company, that foreign principal had no tax liability as far as DDT - foreign principal was not entitled to claim any beneficial treatment in terms of provisions of Article-10(2) of the relevant tax treaty, that the assessee also was also no entitled to claim such beneficial treatment independently, that a tax liability under the Act imposed on domestic transaction of a domestic entity was out of the purview of the DTAA provisions. - HELD THAT:- As decided in own case [2017 (7) TMI 692 - ITAT MUMBAI] DDT is a liability of the domestic company declaring dividend and not liability of the shareholder receiving such dividend income. Whereas, careful reading of Article–10 of India Switzerland treaty prima–facie gives an impression that it speaks of taxability of the dividend at the hands of the recipient of such dividend which is a resident of the other contracting state. Therefore, keeping in perspective the provisions contained under section 115O vis–a–vis Article–10 of DTAA it needs to be examined whether the benefit of tax treaty can be extended to the DDT paid / payable by the assessee. We have noted, the various proposition advanced by the assessee claiming benefit under Article–10 of India Switzerland DTAA as contained in the written notes are nothing but repetition of submissions made before the learned Commissioner (Appeals). Repetition of submissions made before the learned Commissioner (Appeals) on 20th February 2014, a copy of which is at Page–112 of the paper book. Though, reading of Article–10 of India Switzerland DTAA prima–facie gives an impression that it will only apply to non–resident shareholder receiving the dividend, however, still it leaves a scope for examining the claim of the assessee that DDT being a tax on dividend, Article–10 of the DTAA would be applicable even if such dividend is payable by the domestic company. In our view, it will be too simplistic to reject the contention of the assessee on the plea that it will only apply where the non– resident recipient of dividend incurs the liability in respect of dividend. Commissioner (Appeals), though, was required to deal with all propositions advanced by the assessee, he has not done so. Therefore, we are inclined to restore the matter back to the file of the learned Commissioner (Appeals) for fresh consideration after reasonable opportunity of being heard to the assessee.
|