When a domestic company distributes dividend to a non-resident shareholder, the additional tax on distributed profits levied under section 115-O is a liability of the company itself and not of the shareholder. The rate prescribed in section 115-O applies and the treaty rate under Article 11 of the DTAA cannot override it unless the treaty specifically extends relief to the domestic company. Thus, DTAA protection does not reduce DDT liability. However, the Tribunal clarified that a fresh legal claim raised for the first time before the DRP cannot be rejected merely because it was not made before the AO, since the DRP has full jurisdiction to consider such grounds. Held, levy of DDT under section 115-O is valid, but claim before DRP is maintainable. (AY. 2017-18)
JC Bamford Excavators Ltd. v. ACIT (IT) (2025) 212 ITD 321 (Delhi) (Trib.)
S. 9(1)(iv) : Income deemed to accrue or arise in India – Dividend by Indian company -Domestic company paying dividend distribution tax, only then, domestic company can claim benefit of DTAA, if any- Claim for first time before DRP – Claim cannot be rejected – DTAA -India – UK. [S.115O, 144C, Art. 11]