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TMI Blog2024 (3) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... and reasonable opportunity of being heard while disposing off the appeal in gross violation of the principles of natural justice and hence, the order so passed is bad in law and ought to be quashed in toto. Ground No. 2: Refund of excess Dividend Distribution Tax ('DDT') paid - INR 7,82,66,184/- 2. On the facts and in the circumstances of the case and in law, the NFAC grossly erred in not adjudicating the claim of refund of excess Dividend Distribution Tax ('DDT') paid by the Appellant under section 115-O of the Act on the ground that it does not form part of subject matter of the assessment and hence, outside the purview of appellate proceedings. 3. On the facts and in the circumstances of the case and in law, the NFA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to enable the Hon'ble Tribunal to decide the appeal in accordance with the law." 2. Fact in brief is that return of income declaring total income of Rs. 192,91,689/- under normal provision of the Income Tax Act and Rs. 190,69,876/- u/s 115JB of the Act was filed on 10.10.2016. The case was subject to scrutiny assessment and assessment u/s 143(3) of the Act was finalised on 25.12.2018 assessing the total income as per the returned income of the assessee. Further fact of the case are discussed are while adjudicating ground of appeal as under: Ground No. 1: No reasons opportunity of the being heard granted: 3. The ld. Counsel has not pressed this ground of appeal therefore the same stand dismissed. Ground No.2: Refund of excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023) 149 taxmann.com 332 (Mumbai Trib) (SB) holding that DTAA does not get triggered at all when a domestic company pays DDT u/s 115-O of the Act and where contracting states to a tax treaty intend to extend treaty protection to domestic company paying dividend distribution tax only then, domestic company can claim benefit of DTAA, if any. The relevant extract of the decision of the special bench is reproduced as under: "79. As we have discussed earlier, the purpose of DTAA is to avoid double taxation/allocation of taxing rights between two Sovereign nations. When we hold that DDT is a tax not on the shareholder but on the amount declared, distributed, paid as the case may be, by way of dividend and being a tax on income of the company, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be taxed in that other State (France) However, if the beneficial owner of the Dividend is a resident in France, the tax so charged shall not exceed specified percent. The first condition is that the non-resident in France should be taxed in India. We have to look at the DTAA from the receipients taxability perspective. DDT is paid by the domestic company resident in India. It is a tax on its income and not tax paid on behalf of the shareholder. In such circumstances, the domestic company u/s 115-0 does not enter the domain of DTAA at all. 81. If domestic company has to enter the domain of DTAA, the countries should have agreed specifically in the DIAA to that effect. In the Treaty between India and Hungary, the Contracting States hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision. No matter how desirable be such provisions in the other tax treaties, these provisions cannot be inferred on the basis of a rather aggressively creative process of interpretation of tax treaties. The tax treaties are agreements between the treaty partner jurisdictions, and agreements are to be interpreted as they exist and not on the basis of what ideally these agreements should have been. (g) A tax treaty protects taxation of income in the hands of residents of the treaty partner jurisdictions in the other treaty partner jurisdiction. Therefore, in order to seek treaty protection of an income in India under the Indo French tas treaty, the person seeking such treaty protection has to be a resident of France. The expression 'r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Double Taxation Avoidance Agreement is in the nature of self-imposed limitations of a State's inherent right to tax, and these DIAAs divide tax sources, taxable objects amongst themselves. Inherent in the self-imposed restrictions imposed by the DTAA is the fact that outside of the limitations imposed by the DTAA, the State is free to levy taxes as per its own policy choices. The dividend distribution tax, not being a tax paid by or on behalf of a resident of treaty partner jurisdiction, cannot thus be curtailed by a tax treaty provision." 82. We are of the view that the above exposition of law is correct and we agree with the same. Therefore, the DTAA does not get triggered at all when a domestic company pays DDT u/s. 1150 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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