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2019 (11) TMI 651 - AT - Income TaxIncome accrued in India - dividend received from Brazilian subsidiary - HELD THAT:- We find from the combined reading of Article 23(3) and Article 10(2) supra that if the dividend is paid by Brazilian company to Indian Company, the same may be taxed in Brazil as per their local laws which shall not exceed 15% of gross dividend and the said dividend shall be treated as exempt in India. We find that assessee had also enclosed certificate dated 04/04/2017 from Dorfketal BrasilItda stating clearly that the dividends paid in the FY 2005-06 were related to the year 2004 and that it had paid taxes from its net profits after taxes at more than 15% and that there is no separate taxes on dividend in Brazil. The assessee had also submitted the financials of Dorfketal BrasilItda for the A.Y.2005-06 together with the respective computation of total income to evidence the fact that the rate of taxes applied is more than 15% in both the years in which the actual distribution of dividend had taken place. The assessee had also furnished the financials of F.Y.2005-06 of Dorfketal BrasilItda alongwith schedule of retained earnings evidencing the fact that only net profit after taxes is transferred to retained earnings and that dividends are distributed from that, which means that dividends are declared and distributed after paying due taxes in Brazil. Accordingly, we hold that the dividend received by the assessee is to be treated as exempt in India The assessee had also submitted before the ld. CIT(A) that similar claim of exemption in respect of dividend received from Brazilian Subsidiary had been allowed by the ld. AO for A.Y.2007-08, 2008-09 and 2009-10 and in support of this copy of the orders were also furnished thereon. In view of the aforesaid observations, applying principle of consistency and respectfully following the aforesaid decision of Kolkata Tribunal, we hold that dividend received from Brazilian subsidiary is exempt from tax . Accordingly, the grounds raised by the assessee are allowed.
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