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2016 (9) TMI 799 - ITAT INDORE

2016 (9) TMI 799 - ITAT INDORE - TMI - Allowability on taxes paid as credit as per Article 10 & 24 of the DTAA of India and Sri Lanka - Held that:- The taxes paid on declared gross dividend income of ₹ 2,85,44,253/- is allowable to the assessee as credit for the year under consideration in view of Article 10 and 24 of DTAA between India and Sri Lanka. We, therefore, find no flaw in the order of the learned CIT(A) and uphold the same. - ITA No.468/Ind/2015 - Dated:- 1-8-2016 - Shri D.T. Gar .....

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. 3. Short facts of the case are that the assessee is engaged in the business of manufacturing of detergent bar and powder to be supplied to Hindustan Lever Ltd. It has manufacturing units at Dhule and two units at Baddi. Deduction u/s 80IC of the Act has been claimed at ₹ 30,18,400/- in respect of Unit-1 at Baddi as per return filed declaring income of ₹ 2,69,85,362/- earned from turnover of ₹ 50,16,20,874/- during the year under consideration. Revised return declaring income .....

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Agreement) between Srilanka and India and sec. 90(2) of IT Act, 1961 says that in relation to an assessee to whom DTAA applies, the provisions of the Act shall apply to the extent they are more beneficial to the appellant. The DTAA provisions thus prevails over the statutory provisions which are more beneficial to the appellant. The appellant company is a tax resident of India and therefore it is taxable for its global income. However, Article 10 of the DTAA empowers the other contracting state .....

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company is entitled to claim credit of tax inside India in respect of tax deducted as withholding tax in Srilanka. From the TDS certificate filed by the appellant along with the tax challan, it is seen that the gross dividend paid by the Srilankan subsidiary in Srilankan Rupees is 1,20,05,202/- on which 10% of the tax has been deducted in Srilankan Rupees ₹ 10,91,382/- which is equivalent to Indian ₹ 4,76,498/-. The appellant is thus allowed credit for taxes paid in Srilanka as per A .....

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ween the provisions of the Act and the Agreement, the provisions of the Agreement would prevail over the provisions of the Act and can be enforced by the appellate authority and the court. As per the dictates of the Hon'ble Supreme Court DTAA cannot possibly fasten a tax liability which is not imposed by the Act. DTAA may be resorted to for the negativing or reducing it. Therefore, the primary question in every cases whether the provisions of Indian Income Tax Act are applicable in the case .....

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agreement will act as an exception or modification of sections 4 and 5 of Income Tax Act. The provisions of such agreement cannot fasten a liability where the liability is not imposed by a local Act. Where tax liabililty is imposed by the Act, the agreement may be resorted to either for reducing the tax liability or altogether avoiding the tax liqability. In case of any conflict between the provisions of the agreement and the Act, the provisions of the agreement would prevail over the Act in vie .....

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ncerned if it falls within the category stated therein. In the case of Ms. Pooja Bhat vs. DCIT (2009) 123 ITJ (Mum) 4-4. This case relates to a cine artist who performed show in Canada and received remuneration ₹ 186000 and tax of 9000 US$ was also deducted in Canada. The appellant Tribunal held that there is no dispute that as per domestic law, the assessee is liable to pay tax on its entire global income but in view of Article 18 with Canadian Government, it is only that other State wher .....

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ofits where PE is established in other contracting state, income from professional service, income of artist and athletes, government service) which provide that such income may be taxed in other contracting state i.e. state of income source. The third category (includes dividend, interest, royalty and fee for technical services, capital gain on other properties and other income) which provide that such income may be taxed in both the contracting states. For example, Para (2) provides that divid .....

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