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TMI Blog2021 (5) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... d, Thailand - @15% in terms of Article 10 -Dividends of the Double Taxation Avoidance Agreement (DTAA) between India and Thailand instead of 16.995% levied in terms of section 115-O of the Act - HELD THAT:- The assessee pleaded before us that as per Article 10 of the Double Taxation Avoidance Agreement (DTAA) between India and Thailand, the rate of dividend distribution tax to be applied is 15%. Accordingly, the ld. AR pleaded that the excess dividend distribution tax paid by the assessee 1.995% (16.995% 15%) may kindly be directed to be refunded to the assessee. As this aspect is purely a legal issue going to the root of the matter and does not involve verification of any facts, we are inclined to admit this additional ground and take up the same for adjudication in the light of the decision of NTPC Ltd. [ 1996 (12) TMI 7 - SUPREME COURT ] We deem it fit to set aside this additional ground to the file of the ld. AO to examine the same in the light of judgment of the Hon ble Supreme Court in the case of M/s. Tata Tea Company Ltd.[ 2017 (9) TMI 1300 - SUPREME COURT ] and Godrej and Boyce Manufacturing Company Ltd.[ 2010 (8) TMI 77 - BOMBAY HIGH COURT ] - The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenders. During the course of assessment proceedings, the ld. AO observed that assessee had shown exempt income in the form of share of profits from joint ventures (JVs) in respect of which investment of ₹ 4641.75 lakhs was made. We find that the ld. AO had invoked the computation mechanism provided in Rule 8D(2)(iii) of the Rules and arrived at the disallowance of ₹ 23,60,000/-. The assessee pleaded that there was absolutely no expenses incurred by the assessee for earning exempt income in the form of share of profit from joint ventures. It was further pleaded that all expenses relatable thereof were already debited in the books of joint ventures and assessee had merely earned share of profit from joint ventures after the said joint ventures had duly suffered new taxes in its hands. It was also specifically pleaded that the investments figure reflected in the balance sheet in the sum of ₹ 4641.73 lakhs was not the physical investment made by the assessee in the joint ventures and such the same merely represents share of profits / losses (net) accumulated over all the years from joint ventures. In other words, it was pleaded that the figures reflected under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FY 2012-13 12.31 FY 2013-14 (1,111.83) Total 658.34 Inverstment in MAYTAS CONSORTIUM JV-Date of Formation - 09.09.2008 Profits during the following years- INR (in lakhs) FY 2012-13 11.51 FY 2013-14 269.02 Total 280.53 4.3. From the above table, it could be seen that assessee had not made any physical investment in joint ventures and the figures represent in the investment schedule is nothing but the share of profit from joint ventures over all the years and hence, the entire computation mechanism provided in Rule 8D(2) of the Rules fails as the substance of the transaction would prevail over its form. Though the assessee had shown that the accumulated share of profits from joint ventures under the head investment , it is effectively a current account transaction or loans given to the joint ventures by the assessee and the same does not partake the character of actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so before the Tribunal. We find that this Tribunal had indeed admitted the said additional ground by understanding the justification given by the assessee that the additional ground was raised in the light of decision of the Hon ble Supreme Court in the case of Union of India vs. Tata Tea Company Ltd., reported in 85 Taxmann.com 346 on 20/09/2017 wherein it was decided that the tax u/s.115 O of the Act is a tax on dividend. The operative portion of the said decision of the Co-ordinate Bench of this Tribunal in IT(TP)A No.720/Mum/2012 dated 11/11/2019 is reproduced hereunder:- 27. Now, turning to the additional ground, for admission thereof, it has been contended by the ld. Counsel for the assessee that the additional ground could not be raised either at the time of filing of the return of income on 15th October, 2010, or during proceedings before the lower authorities (which culminated in passing of the Final Assessment order on 29th December, 2014), because during that period, the law that tax under section 115-O was a tax on the distributed profits of the company and not on dividend, as laid down by the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n- existence of the PE is not on record, the additional ground is not maintainable; and that the procedure for making a claim, as provided in Article 10(3) of Indo-Netherland Treaty, is also not on record herein. 29. Insofar as regards the argument of the ld. DR that since the additional ground raised does not arise from the orders of the lower authorities, the same cannot be admitted, this argument deserves to be rejected in view of the decisions of the Hon'ble Supreme Court in the cases of National Thermal Power Co. Ltd. v. CIT , 229 ITR 383 (SC) and Jute Corporation of India Ltd. Vs. CIT , 187 ITR 688 (SC), and the Full Bench decision of the Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. Vs. CIT , 199 ITR 351 (Bom.). In fact, as rightly submitted on behalf of the assessee, this is the settled position of law, as has been held by the Hon'ble Bombay High Court in the case of Ultratech Cement Ltd. Vs. ACIT , 81 taxmann.com 74. It remains undisputed that this issue could not be raised either at the time of filing of the return of income on 15 th October, 2010, or during proceedings before the lower authorities (which culminated in pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d are not necessary to decide the admissibility of the same. Further, proving the compliance of the provisions of Article 10(6) of the Treaty, by which Article, the claim of the assessee under Article 10(2) can be denied by the Revenue, is not necessary to decide the admissibility of the additional ground raised by the assessee. 31. With respect to the submission of the ld. DR that the procedure for making a claim, as prescribed in Article 10(3) of the DTAA, is not on record and hence, it requires factual investigation, we are of the view that the same does not, in any manner, relate to the assessee, or VODMC BV, or the project office, and hence, it cannot be regarded as a fact that needs to be examined for the purposes of admission and/or adjudication of the assessee's claim. In any case, as dwelt upon hereinabove, the assessee was prevented from raising the additional ground before the lower authorities, due to a reason beyond the control of the assessee, as considered above. This fact, by itself, is, in our opinion, sufficient to allow it to be raised at this stage. So, even if, arguendo, the objections of the Department were to be acceded to, the assessee s request for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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