9911796707
TMI Blog2025 (1) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... t, such additional income tax payable by the domestic company shall be at the rate mentioned in section 115-O of the Act and not at the rate of tax applicable to the non-resident shareholder( s ) as specified in the relevant DTAA with reference to such dividend income. We are conscious of the sovereign's prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Decided against assessee. - Hon ble Shri ABY T. Varkey, JM And Hon ble Shri Manoj Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. Levy of tax on dividend distributed deeming it to be income of the Company would lead to double taxation as dividend is paid out of profits which are already taxed at applicable tax rates. The Ld. CIT(A) has failed to appreciate the legislative history of taxation of dividend and various judicial precedents relied in our submissions, basis which it could be inferred that DDT paid by the Company is nothing but tax on shareholders income. Ground No.3 - DDT paid is a tax on dividend income of shareholders. Consequently, the provisions of Double Taxation Avoidance Agreement ('DTAA') shall be applicable and hence, tax liability needs to be determined post factoring the provisions of the Act and relevant Article of DTAAs, whichever is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend income of shareholders. Consequently, the provisions of DTAA shall be applicable and hence, tax liability needs to be determined post factoring the provisions of the Act and relevant Article of DTAAs, whichever is more beneficial. The Ld. CIT(A) has erred in facts and law by failing to appreciate that DDT paid is a tax on dividend income of shareholders and the tax liability needs to be determined post factoring the provisions of the Act and relevant Article of DTAAs, whichever is more beneficial. Ground No.7 - Specific inclusion of provisions deeming DDT as a tax on shareholders income in a particular tax treaty cannot be construed as leading to its automatic exclusion in other tax treaties The Ld. CIT (A) has failed to appreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order grossly erred on the facts and in law in disregarding various judicial precedents relied on by the Appellant in its submission. 2.1 From the orders of lower authorities, it emerges that that assessee is a subsidiary entity of two German-based entities. The non-resident entity M/s Zwilling International held 79.98% equity shares of the assessee whereas another non-resident entity M/s Zwilling Beauty held 9.75% shares of the assessee entity. The assessee pad dividend to its shareholders and in terms of provisions of Sec.115-O, it paid Dividend Distribution Tax (DDT) of 15% on dividend so paid by the assessee. 2.2 Subsequently, the assessee made refund application u/s 237 on the ground that as per Article-10 of India-Germany DTAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate mentioned in section 115-O of the Act and not at the rate of tax applicable to the non-resident shareholder( s ) as specified in the relevant DTAA with reference to such dividend income. Nevertheless, we are conscious of the sovereign's prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Thus, the question before the Special Bench is answered, accordingly. Since Ld. CIT(A) has followed a binding judicial precedent, we find no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
