Assessee company paid Dividend Distribution Tax (DDT) on ...

Domestic company paid higher DDT on dividends to Mauritius holding co. instead of lower DTAA rate. Claimed refund but failed to show Mauritius extended treaty protection. Appeals dismissed.

Case Laws     Income Tax

July 23, 2024

Assessee company paid Dividend Distribution Tax (DDT) on dividends distributed to its holding company, a tax resident of Mauritius, at higher rates under the Income Tax Act instead of lower rate of 5% prescribed under the India-Mauritius DTAA. Assessee claimed refund of excess DDT, alleging wrongful denial of treaty benefit. Following the Special Bench decision in Total Oil case, it was held that dividend declared by a domestic company to a non-resident should be taxed at the rate given u/s 115-O, and not the beneficial rates under DTAA, unless the contracting state extends treaty protection to the domestic company. No such protection was shown in the instant case. Hence, treaty benefit was not available in relation to Section 115-O, and assessee's appeals were dismissed.

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