DTAA benefits can determine dividend tax rates, potentially overriding domestic DDT where the treaty rate is more favourable.
The core issue is whether dividend taxation under Section 115-O must yield to more favourable rates in applicable DTAAs. Section 90(2) requires application of the provision more beneficial to the taxpayer where a treaty applies; many DTAAs and MFN protocols prescribe lower dividend rates than Section 115-O. Contextual and purposive reading of Section 115-O, legislative history, and analogous provisions supports treating DDT as a shareholder levy collected by the company and applying treaty-preferred rates, whereas the Mumbai Special Bench's isolated literal construction reached the opposite conclusion. (AI Summary)