CONVERGYS INDIA SERVICES PRIVATE LIMITED,GURGOAN vs. DCIT CIRCLE-4(2), NEW DELHI

Aggrieved by the said order, the assessee is in appeal before the Tribunal wherein following grounds of appeal are taken:- 1 “That on the facts and circumstances of the case, the Ld. CIT(A) erred in not admitting the additional ground raised by the Appellant with respect additional claim of the to restrict the levy of the dividend distribution tax ("DDT") on dividend declared and paid to its non-resident shareholders in accordance with Double Tax Avoidance Agreement (Tax Treaty') between India and USA by holding that fresh claim making first time in appellate proceedings is not permitted in the absence of such claim made in the return of income.

2. That on the facts and circumstances of the case and in law and on merits, the Ld. CIT(A) erred in rejecting the claim of the appellant in respect of levy of the dividend distribution tax ("DDT") on dividend declared and paid to its non-resident shareholders in accordance with the Tax Treaty between India and USA and upheld the applicability of section 115-0 of the Act on such distribution of dividend in the year under consideration.

3. On the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Ld. CIT(A) erred in treating provision written back (amounting to INR 25.79 lakhs) as non-operating in nature on alleged ground that provision written back being an extra-ordinary item, thus cannot be treated operating in nature while computing the Profit Level Indicator ('PLI").

4. On the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Ld. CIT(A) erred in not including the comparable namely Karvy Data Mgmt. Services Ltd. and ACE BPO Services Pvt Ltd, though both such comparables satisfied the filters proposed by the Ld. TPO and being engaged in the similar line of business of appellant.

5. On the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO/Ld. CIT(A) erred in not excluding Infosys Ltd., Mindtree Ltd. and Wipro Ltd in-spite of the fact the said companies are not comparable to the Appellant in terms of functions performed, assets employed, and risks assumed.”

6. With respect to Ground No.1 to 1.2 during the course of hearing, Ld.AR fairly admitted that this issue is decided against the assessee by the Special Bench of ITAT, Mumbai Tribunal in the case of DCIT vs Total Oil India (P.) Ltd in & Others [2023] reported in 149 taxmann.com 332 (Mumbai-Trib.).

7. Heard the contentions of both the parties and perused the material available on record. As admitted by Ld.AR for the assessee, the issue of application of section 115O of the Act on the distribution of dividend and levy of dividend distribution tax on the dividend declared and paid to non-resident, Special Bench of the Tribunal in the case of DCIT vs Total Oil India (P.) Ltd (supra) has held as under:-

Section 9, read with section 115-0, of the Income-tax Act, 1961, read with article 10 of DTAA between India and France Income - Deemed to accrue or arise in India (Dividend-General) -Assessment years 2011-12 to 2018-19 Whether where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts additional income-tax (tax on distributed profits) referred to in section 115-0, such additional income-tax payable by domestic company would be at rate mentioned in section 115-0 and not at rate of tax applicable to non- resident shareholder(s) as specified in relevant DTAA with reference to such dividend income - Held, yes - Whether DDT is a charge to tax on profits of company and not a charge in hands of shareholder or tax paid on behalf of shareholder by domestic company, and therefore, DTAA does not get triggered at all when a domestic company pays DDT under section 115-0 Held, yes Whether, however, wherever contracting states to a tax treaty intend to extend treaty protection to domestic company paying dividend distribution tax, only then, domestic company can claim benefit of DTAA -Held, yes [Paras 77, 82 and 83] [In favour of revenue].”