9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (12) TMI 855 - AT - Income TaxRefund of excess DDT paid by the assessee company - scope of India-Italy DTAA - HELD THAT - The facts are not in dispute and remain same during the relevant AY 2016-17 as they were in preceding AY 2015-16. The impugned issue is squarely covered by the decision of Special Bench of Mumbai Tribunal Total Oil India (P.) Ltd s case 2023 (4) TMI 988 - ITAT MUMBAI (SB) which has been followed by the Ld. CIT(A). The Special Bench of the Mumbai Tribunal has decided the issue in favour of the Revenue relating to applicability of the rate prescribed under the Tax Treaty for tax payable on dividend distribution u/s 115 of the Act in favour of the Revenue. There is no infirmity in the order of CIT(A) in rejecting the claim of the assessee.
Issues Involved:
1. Refund of excess taxes paid on Dividend Distribution Tax (DDT) under the India-Italy Double Taxation Avoidance Agreement (DTAA). Issue-wise Detailed Analysis: 1. Refund of Excess Taxes Paid on DDT: The primary issue in this case was whether the assessee, a domestic company, was entitled to a refund of excess Dividend Distribution Tax (DDT) paid, claiming that the tax rate should be limited to 15% as per Article 11 of the India-Italy DTAA. The assessee argued that since Piaggio & C.S.p.A., Italy, held more than 10% of its shares, the tax on dividend income should not exceed 15% as prescribed in the DTAA. The assessee sought a refund of INR 5,61,53,984, which represented the differential between the DDT paid at 20.36% and the 15% rate under the DTAA. The CIT(A) rejected the claim, relying on the decision of the Special Bench of Mumbai Tribunal in the case of Total Oil India (P.) Ltd., which held that a domestic company cannot apply a lower rate provided under the tax treaty over the DDT rate provided under Section 115-O of the Income Tax Act. The CIT(A) noted that Section 115-O, which imposes DDT, is a notwithstanding section and creates a charge of tax in the hands of the company distributing dividends, and it cannot create a charge other than on 'income'. The Tribunal upheld the CIT(A)'s decision, emphasizing that the issue was covered by the Special Bench decision in Total Oil India (P.) Ltd., which concluded that DDT is a tax on the distributed profits of a domestic company and not on the shareholder. The Tribunal agreed with the CIT(A) that the DTAA does not apply to DDT paid by a domestic company, as the tax is not paid on behalf of the shareholder but is a liability of the company itself. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal, affirming that the DDT payable by the domestic company should be at the rate mentioned in Section 115-O and not as per the DTAA rate applicable to non-resident shareholders. The Tribunal's decision was based on the understanding that DDT is a tax on the company's profits and not on dividend income in the hands of the shareholder, and therefore, the DTAA provisions do not apply. The Tribunal also noted that unless the DTAA specifically provides for the extension of treaty protection to DDT, the domestic company cannot claim such benefits. Consequently, the appeal was dismissed, and the assessee's claim for a refund of excess DDT was rejected.
|
