A unique bench of the Income Tax Appellate Tribunal, Mumbai, has held {that a} tax treaty charge can not override the dividend distribution tax charge (DDT) prescribed beneath the Income-tax (IT) Act.
This is basically as a result of a home corporate, which is paying the dividend is a resident of India and can not invoke the provisions of the tax treaty whilst discharging its legal responsibility beneath segment 115-O to pay tax on dividend disbursed via it.
Up to March 31, 2020, dividend source of revenue was once exempt within the arms of shareholders (together with non-resident shareholders). The Indian resident corporate paying the dividend needed to undergo a DDT at 15% (plus acceptable surcharge and cess), with no need any recourse to the tax treaty charge acceptable to its non-resident shareholders. The function of introducing DDT was once administrative comfort because it was once a unmarried level of tax.
In 2019, the Mumbai bench of the ITAT in relation to Total Oil India bearing on the evaluation 12 months 2016-17 reasoned that DDT will have to be thought to be as a tax legal responsibility of the dividend paying corporate. The Delhi and Kolkata benches of the ITAT had differed on this view. The Mumbai bench of the ITAT positioned reliance at the Supreme Court’s order in relation to Godrej & Boyce Manufacturing Company.
It then referred the problem for the distinction of a different bench. The particular bench composed of GS PannuPresident; NV Vasudevanvice-president and Vikas Awasthy, judicial member, on Thursday concurred with the sooner order of the Mumbai ITAT.
This is basically as a result of a home corporate, which is paying the dividend is a resident of India and can not invoke the provisions of the tax treaty whilst discharging its legal responsibility beneath segment 115-O to pay tax on dividend disbursed via it.
Up to March 31, 2020, dividend source of revenue was once exempt within the arms of shareholders (together with non-resident shareholders). The Indian resident corporate paying the dividend needed to undergo a DDT at 15% (plus acceptable surcharge and cess), with no need any recourse to the tax treaty charge acceptable to its non-resident shareholders. The function of introducing DDT was once administrative comfort because it was once a unmarried level of tax.
In 2019, the Mumbai bench of the ITAT in relation to Total Oil India bearing on the evaluation 12 months 2016-17 reasoned that DDT will have to be thought to be as a tax legal responsibility of the dividend paying corporate. The Delhi and Kolkata benches of the ITAT had differed on this view. The Mumbai bench of the ITAT positioned reliance at the Supreme Court’s order in relation to Godrej & Boyce Manufacturing Company.
It then referred the problem for the distinction of a different bench. The particular bench composed of GS PannuPresident; NV Vasudevanvice-president and Vikas Awasthy, judicial member, on Thursday concurred with the sooner order of the Mumbai ITAT.