判決：
デリー高等裁判所
In the matter of
Principal Commissioner of Income Tax Vs. M/s Polypex Corporation Limited (ITA 571/2019 dated 18.07.2023)
The Assessee earned dividend income from its subsidiary company based in Thailand. Assessee was liable to pay Income Tax @ 10% on such dividend income in Thailand. However, tax was exempted due to the statutory regime obtained in Thailand. While filing ITR in India, Assessee disclosed such income and claimed the credit of tax @ 10% which was payable in Thailand but not paid due to exemptions.
The Income Tax department contended that tax was not paid by the assessee on dividend received from its subsidiary Company. Therefore, it could not be granted tax credit of tax which is not actually paid.
Hon’ble High Court held that as per Article 23(3) of Indo-Thai DTAA, “Thai Tax Payable" includes tax which would have been otherwise payable, but for an exemption or reduction of tax granted for that year or any part thereof, under the two statutory enactments of Thailand. Further, Article 23(6) provides that tax credit can be accorded by the rate of tax which would have been applicable, if income exempted from tax in accordance with the provisions of Indo-Thai DTAA, had not been so exempted.Under Article 23 of Indo-Thailand DTAA, credit for notional tax is granted to incentivize economic development/activity.In accordance with Article 23, it is clear the assessee was entitled to claim tax credit on dividend income received from its Thai subsidiary, in respect of "Thai Tax Payable", which it would have to pay. Therefore, if exemption is not available, the dividend income would have to suffered tax @ 10% in Thailand.
1. 事案の概要
- M/s Polypex Corporation Limited (“The Respondent” or “The Assessee”) has earned Dividend income from its subsidiary company based in Thailand.
- Such dividend income was taxable in the country in which the income emanated i.e., Thailand. However, such tax was not paid because of the statutory regime operating in that country.
- The Assessee included such income in its return of Income filed in India.
- However, The assessee claimed the tax credit in respect of tax, which it would have to ordinarily pay in Thailand on such dividend income. However, such tax was exempted from levy due to the statutory regime obtained in Thailand.
- The Assessee claimed credit of tax payable in Thailand in pursuant to Article 23 of Double Taxation Avoidance Agreement (DTAA) entered between India and Thailand even though such tax is not paid in Thailand.
- The Assessee claimed that it is entitled to claim credit tax, which it was spared from paying in Thailand.
- The Assessing Officer disagreed with the stand taken by the respondent and declined the tax credit sought in Return of Income.
- The Assessee carried the matter before the Commissioner of Income Tax (Appeals). The CIT(A) rejected the preferred appeals.
- In the Tribunal, however, the assessee was successful. It was able to persuade the Tribunal that, having regard to the tax sparing concept embedded in Indo-Thai DTAA, it was entitled to tax credit at the rate of 10%, on the dividend income received from the Thai subsidiary
2. Legal Extracts
Relevant extract of Double Taxation Avoidance Agreement (DTAA) is reiterated below for ready reference:
“Article 23: Elimination of Double Taxation
1. The laws in force in either of the Contracting State shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention.
2. The amount of Thai tax payable, under the laws of Thailand and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of profits or income arising in Thailand, which has been subjected to tax both in India and in Thailand, shall be allowed as a credit against the Indian tax payable in respect of such profits or income provided that such credit shall not exceed the Indian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in Thailand. Further, where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India.
3. For the purposes of the credit referred to in paragraph (2), the term "Thai tax payable" shall be deemed to include any amount which would have been payable as Thai tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under the provisions of the Investment Promotion Act (B.E. 2520) or of the Revenue Code (B.E. 2481) which are designed to promote economic development in Thailand, or which may be introduced hereafter in modification of, or in addition to, the existing laws for promoting economic development in Thailand.
…..
6. Where under this Convention a resident of a Contracting State is exempt from tax in that Contracting State in respect of income derived from the other Contracting State, then the first-mentioned Contracting State may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the income exempted from tax in accordance with this Convention had not been so exempted.”
3. Contention of the Applicant
The Income Tax Authority (“The Applicant”) contented that:
- The tax was not paid by the assessee on dividend received from its subsidiary Company. Therefore, it could not be granted tax credit on dividend income as the same taxable in India at the rate of 30% plus surcharge and cess, as applicable.
- The Tribunal held that to obtain benefit under Article 23(2) of the Indo-Thai DTAA, it was not necessary that the assessee should have paid tax. Relevant point is whether it was liable to pay tax or not. However, this was an erroneous conclusion, as it went beyond the scope and ambit of the Article 23 of the Indo-Thai DTAA.
- The Assessee was not granted exemption under Article 23(2) of the Indo-Thai DTAA.
- The Assessee failed to furnish proof of such exemption being accorded to it. Thus, the Tribunal erroneously concluded that tax had not been paid in view of the exemption extended under the statutory regime prevailing in Thailand.
- The assessee did not pay tax, for reasons other than those provided in Article 23(2) of the Indo-Thai DTAA
- The exemption relied upon by the assessee was actually available to its Thai subsidiary. The exemption permitted the Thai subsidiary to not pay tax on the dividend distributed by it. However, income distributed and remitted to the Assessee became its income, and hence, the assessee cannot be allowed to rely upon the exemption under Thai law, to claim tax credit in India, under the Indian Income Tax Act.
- Therefore, the respondent could have claimed benefit of Article 23(2) of the Indo-Thai DTAA, only if he had paid tax in Thailand.
- Since the respondent/assessee had not paid tax in Thailand, it was rightly declined tax credit by the AO.
4. 被申立人の主張
The Assessee contended that:
- The concept of tax-sparing credit is given under several DTAAs including India-Thai DTAA. Under tax sparing provisions, tax credit may be claimed even for tax which, though payable, is exempted on account of incentives granted by the source country.
- Benefit under Article 23 of the Indo-Thai DTAA is available to the recipient of income in India, as well as those who reside in Thailand.
- The Thai subsidiary was granted an exemption from corporate income under the Investment Promotion Act. Besides this, the dividend distributed by the Thai subsidiary is also exempted from tax under the provision of Section 34 of the Investment Promotion Act.
- Section 70 of the Revenue Code of Thailand levies tax at the rate of 10% on companies incorporated under foreign law, qua assessable income which emanates from, or is received in Thailand.
- Tax could only be levied, as per the Indo-Thai DTAA, on the dividend distributed by the Thai company, in Thailand.
- Since the dividend income received by the assessee has been offered to tax in India, at a higher rate i.e., 30% (exclusive of surcharge and cess), the respondent/assessee is entitled to tax credit at the rate of 10%, in accordance with Article 23 of the Indo-Thai DTAA.
5. Analysis by Hon’ble High Court
Hon’ble High court analyzed the provisions of Article 23 of Indo-Thai DTAA as follows:
a. Interpretation of Article-23 of DTAA
- Article 23(1): As per Para 1 of Article 23, provisions of the contracting state shall apply. However, in case of any conflict between provisions of contracting state and provisions of DTAA, the provisions of the Indo-Thai DTAA would prevail.
- Article 23(2) allows tax credit of “Thai Tax Payable” against the tax payable in India. However, Paragraph 2 specifies the caveat that tax credit cannot exceed the amount of Income tax payable in India (as computed before allowing any such credit) on income arising in Thailand.
- As per Article 23(3), "Thai Tax Payable" includes tax which would have been otherwise payable, but for an exemption or reduction of tax granted for that year or any part thereof, under the two statutory enactments of Thailand. Para 3 also alludes to the fact that the said statutes are designed to promote economic development in Thailand.
- Provisions of Article 23(3) are configured to incentivize investments in Thailand, by granting tax credit of the amount which was payable as tax to the Thai state, but was not paid due to exemption or reduction granted under the said enactments.
- Article 23(4) and (5) are a mirror image of Paragraphs 2 and 3 of Article 23
- Article 23(6) provides a clue as to the rate at which tax credit can be accorded by, inter alia, providing that it would be that rate of tax which would have been applicable, if income exempted from tax in accordance with the provisions of Indo-Thai DTAA, had not been so exempted.
- 通常、「支払うべき税金（tax payable）」という用語は、未払いであっても納付義務がある税金を指します。しかし、この用語の意味は、二つの締約国間で締結された条約に基づいて解釈されるべきものです。考慮すべきは用語の一般的な意味ではなく、締約国の意図です。
- したがって、「タイで支払うべき税金」または「インドで支払うべき税金」という表現の意味は、租税条約（DTAA）に組み込まれた定義に従って判断する必要があります。
- インド・タイ租税条約第23条に基づき、経済発展や経済活動を促進するために、みなし税額控除（tax sparing）が認められています。これは締約国が決定した事項であり、曖昧さがない限り、「タイで支払うべき税金」または「インドで支払うべき税金」という表現は、第23条第3項および第5項の規定をそのまま読み解くことで解釈されます。
- これらの条項は、両国の経済発展を確保するための投資刺激策における相互利益を例証するものです。
- タックス・スペアリング（税額控除の擬制）という概念が存在することは、クラウス・フォーゲルによる二重課税条約の解説書から以下の抜粋で確認できます：
- 外国源泉所得に対して控除方式が適用される場合、経済発展を奨励するためのインセンティブなど、経済的または社会的な政策目的で源泉地国が提供する税制上の優遇措置は、居住地国によって吸い上げられてしまいます。
- そのインセンティブは納税者の利益にはならず、居住地国の税務当局の利益となります（源泉地国で徴収される税額が、減税措置により居住地国の税額よりも低くなることが前提です）。こうして税制上の優遇措置は相殺されてしまいます。
- 居住地国が源泉地国での税額を減税前の水準とみなして控除額を計算すれば、そのような影響を回避できます。
- みなし税額控除は、通常、先進国と発展途上国の間で締結される租税条約で認められます。多くの発展途上国は、外国直接投資（FDI）を誘致し、税制優遇措置を通じて経済成長を促進するために、租税条約交渉においてタックス・スペアリング条項の盛り込みを強く求めます。
- 一部の国は、自国の居住企業が源泉地国において他の投資家とほぼ同等の条件で競争できるよう、タックス・スペアリング条項を認める意向を持っています。タックス・スペアリングの条件は、資本輸入中立性の促進に近いものです……。
- 第23条に従い、納税者がタイの子会社から受け取った配当所得について、本来支払うべきであった「タイで支払うべき税金」に関し、税額控除を申請する権利を有していたことは明らかです。したがって、免税が適用されない場合、当該配当所得はタイにおいて10%の課税を受けることになります。
6. Conclusion
デリー高等裁判所は、以下の結論を下しました：
- 歳入当局の控訴は、タイで実際に税金を支払っていない以上、申請された税額控除は納税者に適用できない、すなわちインド・タイ租税条約第23条に基づく利益は、実際に税金が支払われた場合にのみ適用されるべきであるという主張に基づいています。
- インド・タイ租税条約に関して、タックス・スペアリングによる控除は、タイの居住者だけでなくインドの居住者にも適用されます。これは、経済発展のための投資を促進するために租税条約に組み込まれた仕組みです。
.avif)
