Dividend Tax for Non-Residents: Section 115-O Rate Applies Over DTAA; Tonnage Tax Excludes Transfer Pricing Rules.

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....As decided in Total Oil India (P.) Ltd., where a domestic company declares, distributes or pays dividend to a non-resident shareholder(s), the Additional Income-tax (Tax on Distributed Profits) payable by the domestic company u/s 115-O shall be at the rate mentioned therein and not at the rate applicable to the non-resident shareholder(s) as per the relevant DTAA. The domestic company can claim DTAA benefit only if the Contracting States intend to extend treaty protection for dividend distribution tax. Regarding applicability of transfer pricing regulations to operations carried out through qualifying ships where income is taxed under TTS, following assessee's own case, provisions of Chapter-X cannot be invoked to alter expenditure having no bearing on income computed under Chapter XII-G. Thus, transfer pricing regulations do not apply to income taxed under TTS.....