Consultancy fees claimed as business expense-can tax disallowance rest on survey suspicion despite invoices, contracts and bank trail? Appeal dismisse...
HC allowed the appeal, set aside the AAR ruling, and held that DDT is, in pith and substance, a tax on dividend income of the shareholder, though collected from the distributing company. Consequently, DDT falls within the scope of "tax on dividends" under Article 11 of the India-UK DTAA. By virtue of Section 90(2), the Appellant is entitled to apply the more beneficial treaty rate, limiting Indian tax on such dividends to 10%. Retention of DDT collected in excess of 10% is impermissible. The Department is, however, permitted to gross up the tax appropriately.
HC allowed the appeal, set aside the AAR ruling, and held that DDT is, in pith and substance, a tax on dividend income of the shareholder, though collected from the distributing company. Consequently, DDT falls within the scope of "tax on dividends" under Article 11 of the India-UK DTAA. By virtue of Section 90(2), the Appellant is entitled to apply the more beneficial treaty rate, limiting Indian tax on such dividends to 10%. Retention of DDT collected in excess of 10% is impermissible. The Department is, however, permitted to gross up the tax appropriately.
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