Dividend distribution tax under India-Japan treaty rate challenged, with refund and statutory interest sought.

The petition concerned whether dividend distribution tax paid on dividends remitted to a Japanese resident should be limited to the treaty rate under Article 10 of the India-Japan DTAA, and whether excess tax refund with statutory interest was due. The challenge was to the rejection of the request for treaty-rate application and refund. The revenue's position was that dividend distribution tax under Section 115-O was payable by the distributing company, while the dividend was exempt in the shareholder's hands under Section 10, so the statutory rate under the Act governed the levy. Notice was issued and a counter affidavit directed.

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Issues: Whether the dividend distribution tax paid under Section 115-O of the Income-tax Act, 1961 on dividends remitted to a Japanese resident was liable to be restricted to the rate under Article 10 of the India-Japan DTAA, and whether refund of excess tax with statutory interest was warranted.

Analysis: The petition challenged the rejection of the petitioner's application seeking application of the treaty rate and refund of the amount said to have been paid in excess. The respondent's stand was that, under the dividend distribution tax regime, tax was payable by the distributing company under Section 115-O and the dividends were exempt in the hands of the shareholder under Section 10, and that the statutory rate under the Act governed the levy.

Outcome: Notice issued. Counter affidavit directed to be filed.

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