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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 ..... e material on record, we restore this issue to the file of the assessing officer for deciding afresh after verification of the detail filed by the assessee. Therefore, this ground of appeal is allowed for statistical purposes. - Shri Vikas Awasthy, Judicial Member And Shri Amarjit Singh, Accountant Member For the Appellant : DiveshChawala For the Respondent : Ms. Rajeshwari Menon ORDER PER AMARJIT SINGH (AM): This e-appeal filed by the revenue is directed against the order passed by the ld. CIT(A) NFAC for A.Y. 2016-17. The assessee has raised the following grounds before us: Ground No. 1: No reasonable opportunity of being heard granted: 1. On the facts and in the circumstances of the case and in law, the Appellant was not provided with sufficient 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 exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g heard granted: 3. The ld. Counsel has not pressed this ground of appeal therefore the same stand dismissed. Ground No.2: Refund of excess dividend Distribution Tax (DDT) paid Rs. 7,82,66,184/-: 4. Before the assessing officer the assesse submitted that the rate of dividend distribution tax in relation to the dividend paid to its parent company should be circumscribed to 5% against the rate of 20.359% provided for u/s 115-O of the Act, since the same was covered by the DTAA between Netherland India. The assessing officer has not mentioned anything about accepting or not accepting the request made by the assessee before the Assessing Officer. 5. Aggrieved the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 6. Heard both the sides and perused the material on record. The assessee is a private company incorporated in India and engaged in the business of executing dredging contracts in India. The assessee is a subsidiary of Van Oord Dredging Marine Contractors BV incorporated in the Netherland. During the assessment year 2016-17 the assessee has declared and paid dividend of Rs. 50,95,89,635/- to its parent company and dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the OECD model convention give methods to eliminate double taxation. 80. A reading of Article 10 of the model OECD DTAA shows that Dividends paid by a company which is a resident of a Contracting State, say India to a resident of the other Contracting State (say France) 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 have extended the Treaty protection to the dividend distribution tax It has been specifically provided in the protocol to the Indo Hungarian Tax Treaty that, when the company payin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot seek treaty protection in India- except for the purpose of, in deserving cases, where the cases are covered by the nationality non-discrimination under article 26(1). deductibility non-discrimination under article 26(4), and ownership non-discrimination under article 24(5) as. for example, article 26(5) specifically extends the scope of tas treaty protection to the enterprises of one of the Contracting States, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State The same is the position with respect of the other non-discrimination provisions. No such extension of the scope of treaty protection is envisaged, or demonstrated, in the present case When the taxes are paid by the resident of India, in respect of its own liability in India, such taxation in India, in our considered view, cannot be protected or influenced by a tax treaty provision, unless a specific provision exists in the related tax treaty enabling extension of the treaty protection. (h) Taxation is a sovereign power of the State- collection and imposition of taxes are sovereign functions. Double Taxation Avoidance Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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