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2020 (10) TMI 750 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Appellant has provided software development support services to its AEs with respect to smartcards business thus companies functionally dissimilar with that of assessee and comparing with risk profile need to be deselected from final list. Also exclusion on major unallocable expenses criteria. Addition u/s 40(a)(i) on account of non-deduction of tax at source on reimbursement - some additional evidences were furnished before the DRP - HELD THAT:- As assessee has claimed that pertains to pension of the Managing Director, this needs to be re-verified by the Assessing Officer. We, accordingly, direct the assessee to furnish necessary evidence relating to pension and the Assessing Officer is directed to examine the same and decide the issue in the light of the findings given by the Tribunal in assessee’s own case in A.Y 2011–12. Disallowance of advance written off - assessee entered into a lease deed with E-Lights Techno Park Pvt Ltd for office premises in Chennai but f or some reason, the assessee could not take possession of the office premises and the lessor did not repay the said security deposits - HELD THAT:- We find that the assessee has furnished additional evidences before the DRP. We are of the considered view that such additional evidences should have been examined thoroughly. We, accordingly, restore this issue to the file of the Assessing Officer. The assessee is directed to furnish all the additional evidences in support of the claim of write off and the Assessing Officer is directed to examine the same and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. Income accrued in India - dividend income - benefit of applicable Double Taxation Avoidance Agreement between India and Germany (“DTAA ”) qua the rate of tax on payment of dividend to the shareholder (Giesecke & Devrient GmbH) - interplay between Section 115-0 of the Act on one hand, and Article 10 of DTAA governing taxation of dividend on the other - whether the Dividend Distribution Tax [DDT] is tax on the company or the shareholder since the admissible surplus stands reduced to the extent of DDT? - HELD THAT:- As in GODREJ AND BOYCE MFG. CO. LTD [2010 (8) TMI 77 - BOMBAY HIGH COURT] has unequivocally held that DDT is tax ‘on the company’ and not ‘on the shareholder’. DDT is levy on the dividend distributed by the payer company, being an additional tax is covered by the definition of ‘Tax’ as defined u/s 2(43) of the Act which is covered by the charging section 4 of the Act and charging section itself is subject to the provisions of the Act which would include section 90 of the Act. Liability to DDT under the Act which falls on the company may not be relevant when considering applicability of rates of dividend tax set out in the tax treaties. The generally accepted principles relating to interpretation of treaties in the light of object of eliminating double taxation, in our view does not bar the application of tax treaties to DDT. Tax rates specified in DTAA in respect of dividend must prevail over DDT. Article 10.4 above specifies that clause 1 and 2 will not be applicable if beneficial owner of dividend carries on business in other contracting state of which the company paying dividend is a resident through PE situated therein. Though supporting documents have been filed before us, but these documents need verification from primary officer, that is, the Assessing Officer. We, therefore, deem it fit to restore this issue for limited purpose of verification in the light of the aforesaid Articles of DTAA. DDT levied by the appellant should not exceed the rate specified in Article 10 in India Germany DTAA. Assessee's additional ground is allowed in part for statistical purposes.
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