TaxTMI 
TaxTMI 
2017 (7) TMI 1381
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....f the Act, on 22/12/2008 and determined its income at Rs. 48. 05 crores. 2. Effective Ground of appeal is about rate of Dividend Distribution Tax (DDT) paid by the assessee, during the period under consideration. The matter travelled up to the Tribunal. In its order, dated 22/05/2013, the Tribunal, observed that the First Appellate Aurhority (FAA) had not adjudicated the Ground related to DDT w. r. t Article-10 of the relevant Indo Swiss DTAA. It restored back the matter to the file of the FAA to decide the issue on merits. In pursuance of directions of the Tribunal, the FAA called for submissions of the assessee. After considering elaborate submission the FAA referred to provisions of section 115-O and Article-10 of the DTAA entered into ....
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....f taxability of DDT at 10%. It was submitted by the assessee that as per Article-10 of the India Switzerland DTAA, the tax on dividend distributed should have been restricted to maximum of 10% instead of the rate prescribed under section 115O of the Act. It was submitted by the assessee that as a wholly owned subsidiary of SGS, Switzerland, it had declared dividend of Rs. 35. 93 crore during the year and has deducted tax as per the rate prescribed under section 115O. It was submitted, since the provisions of DTAA are more beneficial to the assessee in terms of section 90 of the Act, the provisions of DTAA will be applicable. 11. The learned Commissioner (Appeals) after considering the submissions of the assessee and analysing the provisio....
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....on dividend income. He submitted, although, DDT is a tax charged and paid by the company paying dividend to shareholders it would not mean that DDT is not a tax on dividend income. He submitted, merely because tax on dividend was paid earlier by the shareholders themselves and now company is required to pay the tax on dividend, it would not indicate that the DDT is not a tax on dividend. Further, the learned Authorised Representative in a written note has propounded various theories to impress upon the fact that DDT is nothing but a tax on dividend, hence, covered under Article-10 of the India Switzerland DTAA. Therefore, as per Article-10(2), the maximum rate at which the tax can be charged is 10% of the gross amount of dividend. 13. Lea....
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....ment year declares dividend or pays any amount by way of dividend out of current or accumulated profits, then, in such case in addition to income tax chargeable in respect of the income of the domestic company, an additional income tax computed @ 15% of the dividend amount shall also be charged. Thus, on a plain reading of the aforesaid provisions, it appears that the DDT is a liability of the domestic company declaring dividend and not liability of the shareholder receiving such dividend income. Whereas, careful reading of Article-10 of India Switzerland treaty prima-facie gives an impression that it speaks of taxability of the dividend at the hands of the recipient of such dividend which is a resident of the other contracting state. There....