SGS India Private Limited Vs CIT (ITAT Delhi)
ITAT Delhi Directs Refund of Dividend Distribution Tax Paid Above India–Switzerland DTAA Rate Under Section 115-O
The appeals arose from separate orders of the Commissioner of Income Tax (Appeals) for Assessment Years 2009-10, 2010-11, 2011-12 and 2012-13. One appeal also arose from an order passed under Section 154 of the Income-tax Act, 1961. The common issue in all the appeals was whether Dividend Distribution Tax (DDT) was payable at the rate prescribed under Section 115-O of the Income-tax Act or at the rate applicable to dividend under the relevant Double Taxation Avoidance Agreement (DTAA). The assessee, a resident corporate entity affiliated with the Societe Generale de Surveillance Group incorporated in Switzerland, had distributed dividends to its overseas shareholders who were tax residents of Switzerland and paid DDT under Section 115-O.
During the assessment proceedings, the assessee claimed a partial refund of DDT, contending that Article 10 of the India–Switzerland DTAA limited the tax on dividends to 10%, whereas DDT had been paid at 16.99%. The Assessing Officer rejected the claim on the ground that the DTAA governed taxation of dividends in the hands of the recipient, whereas DDT was payable by the company distributing the dividend. The Commissioner (Appeals), relying on the Tribunal’s earlier decision in the assessee’s own case and the ITAT Special Bench decision in DCIT vs. Total Oil India Ltd. (ITA No. 6697/Mum/2019, order dated 20.04.2023), upheld the Assessing Officer’s decision.
