S. 90 : Double taxation relief-Foreign Company-discrimination allowed-Company has not made prescribed arrangement-DTAA-India -Korea. [S. 2(22A), Art. 25(1)]
The assessee before us is a banking company incorporated in, and fiscally domiciled in, Korea. It is carrying on business, through its permanent establishment, in India as well. In light of Article 25, it was urged by the assessee that it should be charged to tax at 30 per cent and not 40 per cent. It was held that the levy of tax at a higher rate cannot be considered a less favourable levy of tax or more burdensome taxation vis-à-vis the domestic companies. Further, the mere fact that a company which has not made “arrangements for the declaration of dividends out of income earned in India” is charged at a higher rate of tax in India vis-à-vis domestic company, cannot be treated as discrimination on account of the fact that the enterprise belonged to the other Contracting State, i.e., Korea.( ITA No. 6993/Mum/2012 dated June 27, 2022 (Bench ‘I’) ( AY. 2007-08)
Shinhan Bank v. DCIT (Mum.) (Trib.). www.itatonline.org
[Coram: Hon’ble Shri Pramod Kumar (Vice President) and Hon’ble Shri Amit Shukla (Judicial Member)]