Facts:
a)
Assessee, an Indian company,
invested certain amount in equity capital of Brazilian company and received
certain dividend income during the year.
b)
Assessing Officer (AO)
contended that dividend was received by assessee from a foreign company.
Therefore, it would not fall in the ambit of dividend distribution tax as contemplated
in section 115-O and, accordingly, it would not be exempt under section 10(34).
c)
Assessee contended that
Brazilian company had already paid tax at the rate of 34% on its profits , i.e.,
in excess of rate of 15% as prescribed in paragraph 2 of Article 10 of DTAA
between India and Brazil (DTAA), before distribution of dividend income.
Therefore, it wouldn’t be liable to pay tax on such dividend income in India in
terms of Paragraph 3 of Article 23 of India-Brazil DTAA.
d)
CIT (Appeals) set aside the
addition taking view that the AO did not consider DTAA provisions while considering
the taxability of dividend in India.
e)
Aggrieved by the order of CIT
(A), revenue filed the instant appeal before the tribunal.
