ITO v. Besco Engineering & Services (P) Ltd.

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The Tax Publishers2016 TaxPub(DT) 2228 (Kol-Trib) ITO v. Besco Engineering & Services (P) Ltd. INCOME TAX ACT, 1961 --Double taxation relief--Agreement between India and BrazilReceipt of dividend from Brazilian company----Where assessee received dividend from a Brazilian company, such dividend was not taxable in India as per articles 10 and 23 of DTAA between India and Brazil.--The assesse company was in receipt of dividend from M, Brazil. AO further observed that in the instant case, the assessee company had received dividend from M, which was a foreign company, and hence, the same would not fall in the ambit of dividend distribution tax contemplated in section 115-O and disallowed exemption under section 10(34). *Held:* From the perusal of DTAA between India and Brazil vide Article 10 paragraphs 1 and 2 as well as Article 23 Paragraph 3, since dividend was received from Brazil, wherein the same could have been taxed upto a rate not exceeding 15% as per DTAA but had been by Brazilian law declared to be not subject to income tax and the assessee was a resident company of India within the meaning of Article 23 paragraph 3 of DTAA, such dividends shall be exempt from Indian Income Tax. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 2228 (Kol-Trib)

ITO v. Besco Engineering & Services (P) Ltd.

INCOME TAX ACT, 1961

--Double taxation relief--Agreement between India and BrazilReceipt of dividend from Brazilian company----Where assessee received dividend from a Brazilian company, such dividend was not taxable in India as per articles 10 and 23 of DTAA between India and Brazil.--The assesse company was in receipt of dividend from M, Brazil. AO further observed that in the instant case, the assessee company had received dividend from M, which was a foreign company, and hence, the same would not fall in the ambit of dividend distribution tax contemplated in section 115-O and disallowed exemption under section 10(34). Held: From the perusal of DTAA between India and Brazil vide Article 10 paragraphs 1 and 2 as well as Article 23 Paragraph 3, since dividend was received from Brazil, wherein the same could have been taxed upto a rate not exceeding 15% as per DTAA but had been by Brazilian law declared to be not subject to income tax and the assessee was a resident company of India within the meaning of Article 23 paragraph 3 of DTAA, such dividends shall be exempt from Indian Income Tax.