What should be the withholding rate of tax in respect of dividend?

IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgement reserved on 16.03.2021
Judgement pronounced on 22.04.2021

W.P.(C) 9051/2020
CONCENTRIX SERVICES NETHERLANDS B.V. .....Petitioner
Through: Mr. Deepak Chopra & Mr.
Ankul Goyal, Advs.

versus

INCOME TAX OFFICER (TDS) AND ANR. .....Respondents
Through: Mr. Puneet Rai, Senior
Standing Counsel for Income Tax.

W.P.(C) 882/2021, CM Appl. 2302/2021
OPTUM GLOBAL SOLUTIONS INTERNATIONAL BV .....Petitioner
Through: Mr. Kamal Sawhney with Mr.
Prashant Meharchandani, Mr. Arun
Bhadauria & Mr. Divyansh Singh, Advs.

versus

DEPUTY COMMISSIONER OF INCOME TAX & ANR.....Respondents
Through: Mr. Kunal Sharma, Senior
Standing Counsel with Ms. Zehra Khan
& Mr. Shubhendu Bhattacharya, Advs

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER
HON'BLE MR. JUSTICE TALWANT SINGH

RAJIV SHAKDHER, J :

Preface: -

1. The moot issue, which arises for consideration, in the captioned writ petitions is: as to what should be the withholding rate of tax in respect of dividend?

2. The petitioners, in both cases, before us, are the deductees, i.e., the ultimate tax-payers. The grievance of the petitioners is that their request to respondent no. 1, for issuance of a certificate at a lower withholding tax rate of 5%, was rejected, despite The Government of the Republic of India and the Government of the Kingdom of Netherlands Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion [in short “subject DTAA”], [when read, along with] the appended protocol, making a provision qua the same.

2.1. What is not in dispute is that the impugned certificates issued by respondent no. 1, with the approval of respondent no. 2, have stipulated a withholding tax rate of 10% on dividends receivable by the petitioners.

3. Therefore, insofar as W.P. (C) 9051/2020 [hereafter referred to as the “first writ petition”] is concerned, a challenge is laid to the certificate dated 16.09.2020 issued by respondent no. 1. The relief sought is that the same be quashed. The consequential relief sought is that the petitioner’s Indian counterpart, i.e., the deductor be permitted to remit dividend, after deducting withholding tax at the rate of 5%. Likewise, in W.P. 

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