Treaty limitation on Dividend Distribution Tax may still apply, with matter sent back for fresh adjudication.

Dividend Distribution Tax paid by a domestic company was argued to be, in substance, tax on dividends, so that the India-Switzerland DTAA limitation under Article 10 could still be examined. The Tribunal noted that an earlier year in the assessee's own case had recognised the possible relevance of Article 10 even where dividend is paid by a domestic company, and that the first appellate authority had not addressed all submissions. The matter was therefore remitted for fresh adjudication after considering the full record and arguments.

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Issues: Whether Dividend Distribution Tax paid by a domestic company could be examined for limitation under Article 10 of the India Switzerland DTAA and whether the matter required fresh consideration.

Analysis: The assessee's claim was that DDT, though levied on the domestic company under Section 115-O of the Income-tax Act, 1961, was in substance tax on dividend and therefore the treaty restriction under Article 10 could apply. The earlier appellate view had rejected the claim on the footing that DDT was a domestic levy outside the scope of the treaty. The Tribunal noted that the issue had been considered in the assessee's own earlier year, where it was observed that Article 10 may still be relevant even when dividend is paid by a domestic company, and that the appellate authority had not dealt with all the contentions raised.

Conclusion: The matter was remitted to the first appellate authority for fresh adjudication after considering all submissions. The assessee succeeded only to that extent.

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