Constitutional validity of section 10(34) and draconian section 115BBDA is challenged on ground that section 115BBDA does not have any ‘base’, and it makes hostile discrimination between a resident assessee and a non-resident assessee, as provision only applies to a resident assessee

• The High Court quashed the writ observing that the proviso to section 10(34) gives primacy to section 115BBDA over section 10(34) and that clause (a) of sub-section (1) of section 115BBDA is clear and categoric as it stipulates that dividend income upto Rs. 10 lacs is not to be charged to tax @ 10% under section 115BBDA. Dividend income of less than Rs. 10 lacs continues to remain exempt under section 10(34).

• The High Court further observed that non-residents are liable to pay tax in the country of their residence. Taxation regime applicable to non-residents need not be identical to that applicable to residents.