The High Court, allowing the appeal, held that Dividend Distribution Tax (DDT) levied under section 115-O, though statutorily payable by the distributing company, is in substance a ‘tax’ on dividend income of the shareholder, the incidence being shifted to the company merely as a collection mechanism. Since DDT constitutes ‘income-tax’ within the meaning of section 2(43), it falls within the scope of Article 2 and Article 11 of the India-UK DTAA and is subject to the overriding provisions of section 90(2). Consequently, dividends distributed by an Indian company to its UK-resident (beneficial owner) are entitled to the beneficial treaty provisions, restricting India’s taxing rights to 10% under Article 11(2) and levy of DDT in excess thereof was held contrary to the DTAA and unsustainable in law. Provisions of the Act apply only to the extent more beneficial to the assessee.  Ruling of the Board for advance rulings set aside. Department granted liberty to gross up tax in an appropriate manner.  (AY. 2016-17 to 2018-19)