Tax Hotline
April 26, 2002
Indian Tribunal rules on availability of treaty tax rates upon filing of tax returns
In a recent judgement, the Mumbai Income Tax Appellate Tribunal (“Tribunal”) has held that in order that a foreign company can claim the benefit of tax rates prescribed in the Double Taxation Avoidance Agreement (“DTAA”) between its country of residence and India, it must file a tax return in India and get itself assessed by the Indian Income Tax department (“I-T department”). The Indian resident, making remittance to the foreign company cannot apply the treaty tax rates for withholding tax at source.
In a case between I-T Department and Poysha Industrial, Mumbai (“taxpayer”), the taxpayer made an interest payment to a German company and two UK based companies, deducting tax at the rate of 15% and 10% respectively, being the tax rates under the respective DTAA. The assessing officer disputed the rate and observed that the appropriate rate for deduction of tax would be 30%. The assessing officer was of the view that the provisions of the tax treaty would come into play later and not when tax is deducted at source. He therefore directed the taxpayer to pay the shortfall. The Tribunal agreed with the assessing officer’s views and ordered the taxpayer to pay the shortfall.
Source: The Economic Times, April 26, 2002.
Disclaimer
The contents of this hotline should
not be construed as legal opinion. View detailed disclaimer.
This hotline does not constitute a
legal opinion and may contain information generated
using various artificial intelligence (AI) tools or
assistants, including but not limited to our in-house
tool,
NaiDA. We strive to ensure the highest quality and
accuracy of our content and services. Nishith Desai
Associates is committed to the responsible use of AI
tools, maintaining client confidentiality, and adhering
to strict data protection policies to safeguard your
information.
This hotline provides general information
existing at the time of preparation. The Hotline is
intended as a news update and Nishith Desai Associates
neither assumes nor accepts any responsibility for any
loss arising to any person acting or refraining from
acting as a result of any material contained in this
Hotline. It is recommended that professional advice
be taken based on the specific facts and circumstances.
This hotline does not substitute the need to refer to
the original pronouncements.
This is not a spam email. You have
received this email because you have either requested
for it or someone must have suggested your name. Since
India has no anti-spamming law, we refer to the US directive,
which states that a email cannot be considered spam
if it contains the sender's contact information, which
this email does. In case this email doesn't concern
you, please
unsubscribe from mailing list.
|