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TMI Blog2017 (7) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... domestic transaction of a domestic entity was out of the purview of the DTAA provisions. - HELD THAT:- As decided in own case [ 2017 (7) TMI 692 - ITAT MUMBAI] DDT is a liability of the domestic company declaring dividend and not liability of the shareholder receiving such dividend income. Whereas, careful reading of Article 10 of India Switzerland treaty prima facie gives an impression that it speaks of taxability of the dividend at the hands of the recipient of such dividend which is a resident of the other contracting state. Therefore, keeping in perspective the provisions contained under section 115O vis a vis Article 10 of DTAA it needs to be examined whether the benefit of tax treaty can be extended to the DDT paid / payable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 254(1) of the Income- tax Act, 1961(Act) Per Rajendra, AM: Challenging the order dated 30-01-2014 of CIT(A)-11, Mumbai the assessee has filed the present appeal. Assessee-company, engaged in the business of Quality Inspection, control testing and verification, filed its return of income, on 31/10/2005, declaring total income of ₹ 44.52 crores. The Assessing officer(AO)completed assessment u/s. 143 (3)of the Act, on 22/12/2008 and determined its income at ₹ 48. 05 crores. 2. Effective Ground of appeal is about rate of Dividend Distribution Tax (DDT) paid by the assessee, during the period under consideration. The matter travelled up to the Tribunal. In its order, dated 22/05/2013, the Tribunal, observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end was payable by domestic company. The Departmental Represen -tative(DR)left the issue to the discretion of the Bench 3. We have heard the rival submissions and perused the material available. We find that while adjudicating appeals for 2008-09 in the case of the assessee, the Tribunal had observed as under :- 10. Brief facts are, before the first appellate authority the assessee urged an additional ground raising the issue of taxability of DDT at 10%. It was submitted by the assessee that as per Article 10 of the India Switzerland DTAA, the tax on dividend distributed should have been restricted to maximum of 10% instead of the rate prescribed under section 115O of the Act. It was submitted by the assessee that as a wholly owned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A are not applicable. 12. Learned Authorised Representative submitted before us that the DDT is a tax on dividend. Referring to the provisions of section 115O, he submitted that, it is a tax on dividend and not a tax on the income of the company paying dividend. Referring to the CBDT Circular no. 763 dated 18th February 1998, the learned Authorised Representative submitted, DDT is administratively convenient method for collection of tax on dividend income. He submitted, although, DDT is a tax charged and paid by the company paying dividend to shareholders it would not mean that DDT is not a tax on dividend income. He submitted, merely because tax on dividend was paid earlier by the shareholders themselves and now company is required to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 10 of India Switzerland DTAA would apply. It is the contention of the assessee that since as per the Article 10(2) of the DTAA, on dividend is chargeable at the maximum rate of 10% of the dividend income, the assessee should get benefit of the DTAA in terms of section 90 of the Act. Before we proceed to examine the validity of assessee s claim, it is necessary to observe that section 115O, provides that if a domestic company in any assessment year declares dividend or pays any amount by way of dividend out of current or accumulated profits, then, in such case in addition to income tax chargeable in respect of the income of the domestic company, an additional income tax computed @ 15% of the dividend amount shall also be charged. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient of dividend incurs the liability in respect of dividend. In our considered opinion, the learned Commissioner (Appeals), though, was required to deal with all propositions advanced by the assessee, he has not done so. Therefore, we are inclined to restore the matter back to the file of the learned Commissioner (Appeals) for fresh consideration after reasonable opportunity of being heard to the assessee. Respectfully following the above order, we direct FAA to deal with all the prepositions advanced by the assessee. We are restoring back the matter to the file of FAA for fresh consideration, who would afford a reasonable opportunity of hearing to the assessee . As a result, appeal filed by the assessee is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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