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The Tax Publishers Dy. CIT v. UCO Bank [ITA No. 197/Kol/2011, ITA Nos. 1329 & 1102/Kol/2008, ITA Nos. 07, 415 & 2286/Kol/2010, dt. 21-3-2016] : 2016 TaxPub(DT) 1576 (Kol-Trib) Dividend income under Indo Malaysian DTAA under old treaty/new treaty--Para 10 Whether unilateral tax credit is available as tax credit under MAT liability--Para 14 *Facts:* There were different points in appeal for the assessee bank. During assessment year 2004-05 assessee was in receipt of dividend income from Malaysia which was claimed exempt under section 10(34) read with section 115-O and in line with Indo-Malaysian DTAA. Assessing Officer gave it a reading that section 115-O read with section 10(34) is applicable only to domestic dividend and not to dividend from overseas. On appeal Commissioner (Appeals) upheld the said addition. On further appeal to ITAT: Assessee had operations in Hong Kong a non-DTAA country. During the assessment year 2007-08 it was MAT liability which was applicable to the assessee as against which taxes paid in Hong Kong was claimed as a tax credit. Assessing officer disallowed the tax credit citing that the same is available only on normal provisions and not under MAT provisions. Commissioner (Appeals) allowed the said tax credit against MAT provisions. On further appeal by the department: Held in favour of the assessee that the new DTAA with Malaysia came into effect only only wef. 1-4-2004 and thus was not applicable to the earlier periods as per Entry into force - article 28 provisions and since old DTAA provisions only taxed dividend income in Malaysia the same was exempt under the DTAA provisions as taxing it again will mean double taxation on the same dividend income. Held by the ITAT in favour of the assessee that they were entitled to tax credit on the Hong Kong income which went into the MAT computation as well. The law under section 91 does not distinguish tax under normal provisions or under MAT provisions thus credit was eligible to the assessee.

The Tax Publishers

Dy. CIT v. UCO Bank [ITA No. 197/Kol/2011, ITA Nos. 1329 & 1102/Kol/2008, ITA Nos. 07, 415 & 2286/Kol/2010, dt. 21-3-2016] : 2016 TaxPub(DT) 1576 (Kol-Trib)

Dividend income under Indo Malaysian DTAA under old treaty/new treaty--Para 10

Whether unilateral tax credit is available as tax credit under MAT liability--Para 14

Facts:

There were different points in appeal for the assessee bank. During assessment year 2004-05 assessee was in receipt of dividend income from Malaysia which was claimed exempt under section 10(34) read with section 115-O and in line with Indo-Malaysian DTAA. Assessing Officer gave it a reading that section 115-O read with section 10(34) is applicable only to domestic dividend and not to dividend from overseas. On appeal Commissioner (Appeals) upheld the said addition. On further appeal to ITAT:

Assessee had operations in Hong Kong a non-DTAA country. During the assessment year 2007-08 it was MAT liability which was applicable to the assessee as against which taxes paid in Hong Kong was claimed as a tax credit. Assessing officer disallowed the tax credit citing that the same is available only on normal provisions and not under MAT provisions. Commissioner (Appeals) allowed the said tax credit against MAT provisions. On further appeal by the department:

Held in favour of the assessee that the new DTAA with Malaysia came into effect only only wef. 1-4-2004 and thus was not applicable to the earlier periods as per Entry into force - article 28 provisions and since old DTAA provisions only taxed dividend income in Malaysia the same was exempt under the DTAA provisions as taxing it again will mean double taxation on the same dividend income. Held by the ITAT in favour of the assessee that they were entitled to tax credit on the Hong Kong income which went into the MAT computation as well. The law under section 91 does not distinguish tax under normal provisions or under MAT provisions thus credit was eligible to the assessee.