DDT Must Follow DTAA Limits Because Dividend Is Shareholder Income: Bombay HC

Colorcon Asia Pvt. Ltd. Vs JCIT (Bombay High Court)

In appeal against the BFAR ruling, the Bombay High Court examined whether Dividend Distribution Tax (DDT) paid by an Indian company on dividends distributed to its UK parent is governed by Section 115-O alone or is subject to the 10% limitation under Article 11 of the India–UK DTAA. The Court held that BFAR had fundamentally erred in treating dividend as income of the company merely because DDT is collected from it, emphasizing that the character of dividend as shareholder income remains unchanged under Sections 2(22) and 2(24)

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