Case Law Details
PCIT Vs Polyplex Corporation Ltd (Delhi High Court)
Delhi High Court held that tax credit could not be extended to the assessee, because it had not paid tax in Thailand, i.e., that benefit under Article 23 of the Indo-Thai DTAA could only be extended in a situation where the tax had actually been paid.
Facts- The respondent/assessee claims that it is eligible for tax credit qua tax which, though payable in the country from where the income emanated, was not paid because of the statutory regime operating in that country.
The respondent/assessee, in seeking tax credit qua tax payable [though not paid], has sought to place reliance on Article 23 of the Double Taxation Avoidance Agreement [“DTAA”] obtained between India and Thailand.
It was the respondent/assessee’s stand that it ought to be given tax credit qua the tax which it was spared from paying, on income by way of dividend, received from its subsidiary in Thailand, in consonance with the provisions of Article 23 of the Indo-Thai DTAA. Thus, the issue at hand centres around the concept of “tax sparing”, which is embedded in several DTAAs arrived between India and other countries, including Thailand.
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