DTAA can’t be enforced unless notified under Income Tax Act: SC

A Double Taxation Avoidance Agreement (DTAA) cannot take effect unless it is published under the Income Tax Act, the Supreme Court ruled, which may lead to demands for increased dividend taxes from companies like Nestle SA, the parent company of Nestle India.

In ruling in favor of the Income Tax Department, a Division Bench of Justices S RavindraBhat and Dipankar Datta stated, “A notification under Section 90(1) is necessary and a mandatory condition for a court, authority, or tribunal to give effect to a DTAA, or any protocol changing its terms or conditions, which has the effect of altering the existing provisions of law.” The Division Bench was handling a number of 11 petitions, with Nestle SA as the respondent in the main petition.