No Withholding Tax Applicable On Arbitral Award

• Holds that damages for breach of contract and interest thereon, paid in consequence of an international arbitral award, are not taxable in India under Article 22(1) of the Indo-Swiss DTAA;
• Re-affirms the principle that amounts paid pursuant to a court decree assume the character of a judgment debt and are not amendable to any deductions or adjustments (including tax deduction at source) absent specific provision in the Civil Procedure Code, 1908, the Income Tax Act, 1961, or the decree itself.

The Delhi High Court ("Court") in Glencore International AG v. Dalmia Cement (Bharat) Limited ¹ has held that amounts paid to a non-resident pursuant to an international arbitration award would not be subject to withholding tax in India.