Case Laws
Acts
Notifications
Circulars
Classification
Forms
Manuals
Articles
News
D. Forum
Highlights
Notes
🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
⚠️ This portal will be discontinued on 31-07-2025
If you encounter any issues or problems while using the new portal,
please
let us know via our feedback form
so we can address them promptly.
Home
2004 (2) TMI 279 - AT - Income TaxDisallowance of deduction u/s 80M - domestic companies - On what basis is a company classified as a domestic company and a foreign company under the Income-tax Act - Whether or not the provisions of section 80M are in discriminatory provisions vis-a-vis French companies assessed to tax in India -HELD THAT - During the course of hearing before us we shared our then prima facie impression with the learned representatives that the discrimination so far as non-availability of section 8M to the foreign companies is concerned if at all that can be termed as a discrimination is not on the ground of nationality but is on the ground as to whether or not the company in question has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of income liable to tax in India have not been made. Learned counsel s reply was that since the appellant company does not have any shareholders in India there is no question of making any prescribed arrangements for the declaration and payment within India of the dividends. It thus implies that conditions u/s 2(22A) of the Act for being classified as a domestic company are satisfied. We are of the considered view that the provisions of Article XXI only deal with the cases of discrimination on the ground of nationality and non-availability of deduction u/s 80M to the foreign companies i.e. companies which are not domestic companies has nothing to do with nationality of a company. On the contrary this classification is at best relatable to requirements connected with residence which as stated in the OECD commentary extracted earlier in this order cannot be a reason enough for invoking the non-discrimination clause. We may add that the provisions of Article 26(1) of the present India France DTAA (209 ITR Statute 130) is materially similar in scope. Accordingly non-discrimination clause in the Indian France DTAA cannot be invoked in the cases where provisions of Indian Income-tax Act more favourable to the domestic companies vis-a-vis foreign companies. Once we come to this conclusion it follows that the case of non-availability of deduction u/s 80M cannot be covered by the non-discrimination clause under the India France DTAA. We therefore see no need to address ourselves to the merits of assessee s grievance about discrimination against foreign companies even if such a discrimination actually exists. The assessee s grievance against CIT(A) s declining the deduction u/s 80M and assessee s reliance on Article XXI of the applicable India France DTAA in support of such a grievance is not sustainable in law. We therefore reject the same. The appeal is allowed.
|