TaxTMI 
TaxTMI 
2026 (1) TMI 189
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....1,13,861/- for AYs. 2011-12, 2012-13 and 2013-14 respectively. Since the issues involved in these the appeals of the same assessee are common, they are disposed of by this consolidated order, for the sake of convenience and brevity. ITA No.- 3910/Del/2024 (A.Y. 2011-12) is taken as a lead case. 2. Brief facts of the case: The assessee company is a Private Limited Company incorporated under the Companies Act, 1956 and is a tax resident of India and engaged in the business of manufacturing and selling of catalytic converters for automobile industry. The assessee company is wholly owned subsidiary of Mitsui Mining and Smelting Company Limited, Japan and is a foreign Company, which is formed and registered under the laws of Japan and hence is a tax resident of Japan which has its registered office at Osaki Shingawaku, Japan. The assessee filed its return of income for the assessment year 2011-12 on 29/11/2011 declaring a total income of Rs. 51,62,76,088/-, and claimed a refund of Rs. 2,60,33,898/-. During the financial year - FY 2010-11 (AY 2011-12), the Company paid dividend of INR 5.45,72,957 to its shareholder company, Mitsui Mining and Smelting Company Limited, Japan (MMS'....
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.... The claim of the assessee has been perused along the return of income filed for the A.Y. 2011-12. It emerged on perusal of return of income that no claim of refund on excess payment of DDT has been claimed by the assessee. It has been exclusively mentioned in section 239 of the I.T. Act, 1961 that "every claim for refund under this Chapter (Chapter XIX) shall be made by furnishing return in accordance with the provisions of section 139". In the instant case, neither the assessee company claimed the aforesaid refund in its original return of income nor had filed any revised return of income. Taking into consideration the statutory provisions of the I.T. Act, 1961, the refund of amount Rs. 36,06,590/- as claimed by the assessee company for the A.Y. 2011- 12 is not warranted in the case as the same was not claimed at the time of filing of return of income. Accordingly, the claim of the assessee is hereby rejected." 3. Aggrieved with the said order the assessee filed an appeal before the Ld. CIT(A), on the following grounds of appeal: "1.1 That on the facts and circumstances of the case and in law, the Ld. AO has erred in law and in facts of the case by disregarding ....
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....y to file return do not allow alteration of the rate prescribed and prevented the appellant to claim the refund and cited CBDT circular No. 14 (XL- 35) dated 11 April 1955. With regard to the above ground, it is to be noted that as per the scheme of section 115-O Income Tax Act, the liability of the additional income tax by way of DDT is on the appellant company at the rate prescribed therein and further no credit shall be claimed by the company or by any other person in respect of the amount of DDT paid. Accordingly, the ITR forms do not provide for any rate change or refund claim on account of the DDT paid as per section 115-O of the Act. Further, it is to be noted that the Circular No.14 cited above was issued prior to the coming into force of the present Income Tax Act. 1961 and the manner of claiming refund has been codified under section 239 of the Act and the Income Tax Authorities cannot go and help the assessee's disregarding the statutory provisions without there being any enabling provisions in the Act or instructions issued by the CBDT. Accordingly, the appellant ground is devoid of any merit and dismissed." 4.1 Further, the Ld. CIT(A) rejected the ground no. 2 o....
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....chanism of 73 Special Bench Total Oil India Pvt. Ltd. DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Thus, the question before the Special Bench is answered, accordingly. In view of the above decision of the Hon'ble Special Bench, the appellant's claim has no merit and accordingly the ground no. 2 is dismissed." 5. Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal: "Based on the facts and circumstances of the case, Mitsui Kinzoku Component India Private Limited (the Appellant) respectfully appeals against the order passed by Commissioner of Income Tax (Appeal). National Faceless Appeal Centre ('CIT(A)') under section 250 of the Income tax Act, 1961, (the Act) on the following grounds, which are without prejudice to each other 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has vaguely disregarded the binding CBDT circular No. 14 (XL-35) dated 11 April 1955 to grant relief to the Appe....
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....he Appellant would like to submit before your Honors that for captioned year, the Company filed an application before jurisdictional Assessing Officer (Ld. AO) under Section 237 of the Act for grant of refund of excess Dividend Distribution Tax ('DDT') paid during the captioned year. However, the Ld. AO while disposing off the application filed under Section 237 of the Act, stated that as per the provisions of section 239, claim for refund can only be made by furnishing the return and since, Appellant have made claim through an application under section 237 and not by furnishing of return under section 139, claim of Appellant should be rejected. 3. Against the impugned order of Ld. AO for captioned year, the Appellant filed an appeal before Ld. NFAC challenging the order of Ld. AO for non-grant of refund on the ground that refund has not be claimed in the income tax return filed by the Company and not on merits. 4. During appellate proceedings before Ld. NFAC, it was highlighted that the Appellant was prevented by Income-tax return utility for filing claim of refund of excess DDT, since Income-tax return utility does not allow the Appellant to alter the ra....
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.... Appellant pray's that in the interest of justice, Appellant's additional ground enclosed as Annexure 2 be admitted and put up for hearing and an opportunity be granted to both the parties before final adjudication thereon. 10. It is humbly submitted that Hon'ble Tribunal is vested with wide powers including acceptance of additional grounds, as is clearly supported by various judicial precedents including Supreme Court decision in the case of National Thermal Power Company Limited vs. CIT-229 ITR 383 (SC), wherein it was held that- "Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied,....
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....ar but due to limitation in income tax utility for alteration of the rate at which dividend is to be paid, the Appellant was barred for claiming the refund in its income-tax return. The Appellant craves leave to alter, amend or withdraw all or any of the grounds of appeal herein or add any further grounds as may be considered necessary and to submit such statements, documents and papers as may be considered necessary either before or during the appellate proceedings. 5.2 We find that all the facts relevant for adjudication of the aforesaid additional grounds are already on record. This additional ground is a legal ground. Hence, in view of the decision of the Hon'ble Supreme Court in the case of NTPC Limited vs CIT 229 ITR 383(SC), the additional grounds filed by the assessee are hereby admitted and taken up for adjudication. 5.3 Further, the assessee has also filed a written submission in respect of the additional grounds of appeal filed on 28.02.2025 and the relevant extract of submission as appearing at page no. 17 to 19 of the paper book, are reproduced as under: "2.17. The Appellant would like to submit that the provisions of Section 239 of the Act as a....
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....to Pg 212 of PB), held that any procedural changes, such as modifications in utility software or instructions issued by tax department, cannot override substantive right of taxpayer to claim any relief and any action or inaction on part of tax authorities that limits ability of taxpayers to avail of this statutory benefit is arbitrary and violative of rule of law It is well-settled that statutory benefits must be extended in a manner that aligns with the objectives of the legislature. In this regard, procedural changes that deprive taxpayers of such benefits warrant judicial intervention to rectify the anomaly and ensure justice. Tax authorities must act as facilitators to help taxpayers comply with the law rather than creating impediments through technical or procedural hurdles. Ensuring fairness, equity, and transparency in tax administration is crucial for upholding public confidence in the system b) Delhi High Court in case of Cosmo Films Ltd v. CBDT [2019] 108 taxmann.com 49 (Delhi) (Refer Pg 213 to Pg 216 of PB), has held that where because of software glitch, assessee is prevented from either filing return or claiming a benefit, manual filing can be done in....
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....f the assessee on merits relying upon the decision of the Special Bench in the case of DCIT vs. Total Oil India (P.) Ltd. [2023]149 taxmann.com 332, which has now been over ruled by the decision of the Hon'ble Bombay High Court, Goa Bench in the case of M/s Colorcon Asia Pvt. Ltd. vs. Joint Commissioner of Income Tax, Special Range, Goa in Tax Appeal no. 5 of 2024 vide order dated 28.11.2025 and requested that ground no. 2 to 2.4 of the appeal may be allowed. The Ld. AR further submitted that Hon'ble Bombay High Court in the aforesaid case has held that an Indian company is entitled to restrict the tax rate on dividends distributed to its foreign parent company to 10%, in accordance with DTAA, rather than domestic rate prescribed under Section 115-O of Income Tax Act, thus, overruling the ITAT Special Bench decision in case of Total Oil India Private Limited. 8. The Ld. Sr. DR relied upon the orders of the authorities below. 9. We have heard both the parties and perused the material available on record. The assessee during the previous year relevant to A.Y. 2011-12 had made payment of DDT of Rs. 90,63,886/- under section 115-O of the Act @ 16.61% (15% tax + 7.5% Surcharge + 3....
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....ove view of the AO and the Ld. CIT(A) has been carefully perused by us but not found to be acceptable. In this case, the assessee had filed claim u/s 237 of the Act and had also filed its return of income on due date but, in view of the absence of any utility in claiming refund u/s 115-O of the Act, the assessee submits that the said claim could not be made in the return of income. In this regard, on similar facts, the Hon'ble Bombay High Court, in the case of Chamber of Tax Consultants v Director General of Income (System) [2024] 169 Taxmann.com 506 (Bombay) held that the tax authorities must act as facilitator to help tax payers comply with the law rather than creating impediments through technical or procedural hurdles. The head-note of the said decision is reproduced as under: "Section 139, read with sections 87A and 119, of the Income-tax Act, 1961 - Return of income -Revised return (87A rebate) Assessment year 2024-25 - Revenue published a change in utility for filing income tax returns online with effect from 5-7-2024, however, said modification unilaterally disabled assessee's from claiming rebate under section 87A-Whether procedural changes, such as modifications ....
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.... in the case of M/s Colorcon Asia Pvt. Ltd. vs. Joint Commissioner of Income Tax (supra). The relevant findings of the Hon'ble Bombay High Court is reproduced as under: "55. We find ourself fortified by the observation of Delhi Tribunal in Giesecke & Devrient Ltd. (supra), where with reference to the legislative history of Section 115-O, it emerges with clarity, that DDT, is a levy on the dividend distributed by payer company. being an additional tax is covered within "Tax' as defined in Section 2(43) of Act and, hence, is chargeable as per Section 4, which is subject to other provisions, which include Section 90 and sub-clause (2) thereof, then specially in case of Avoidance of Double Tax, the provisions more beneficial to assessee must be preferred. Considering that the international treaties involve extensive negotiations between two nations, and definitely being conscious of the respective Nation's power to tax, the benefits and detriments of a treaty and particularly a double tax treaty and its avoidance, can only be reciprocal when the flow of trade and investment between treaty partners rests on balance and it is not allowed for one treaty partner to secure ....
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....tic company and not shareholder Le. Colorcon U.K. and DTAA is not triggered and, therefore, there is no question of its being taxed 10% as per DTAA. It also render a finding that Article 11(2) is not triggered at all, as there is no mutual agreement settling the mode of application of tax rates. On perusal of the impugned Ruling by BFAR and on its detail analysis, according to us BFAR has failed to appreciate that section 4 of the Act of 1961 levies income-tax, including additional income tax, in respect of the total income' of the previous year of every person. Thus, it is the earning of the 'income' that attracts the charge. 'Income' has been defined under Section 2(24) of the Act to include 'dividend'. Therefore, the Authority has erred in not appreciating that Section 115-O levies additional tax on the company on the "amounts declared, distributed or paid by way of dividends". According to us, the declaration, distribution or payment of dividend by company cannot in any manner be regarded as 'income of the company distributing the dividend. Even Section 2(24) has not been amended by the Legislature inasmuch as regarding the "amounts decl....
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....a Tea (supra) and on the other hand its reliance upon Godrej and Boyce (supra) is misplaced. The decision in Godrej & Boyce was rendered on an issue as to whether expenses incurred in relation to earning an exempt income by way of dividend was to be disallowed under Section 14A pf the Act. The Assessee argued that dividend income could not be treated as 'exempt' as the income suffered tax under Section 115-O in hands of the company distributing dividend. It was argued that DDT under Section 115-O was nothing but tax paid on behalf of the shareholder and such income which had attracted tax could not be said to be 'exempt'. The conclusion was therefore arrived that Section 14-A of the Act would apply to dividend income on which tax is payable under Section 115- O of the Act. The decision in Godrej & Boyce is, therefore, in a completely different context as the issue before the Court was whether the dividend income not forming part of shareholders income attract Section 14-A qua the shareholder, but the issue before the BFAR was as to what could be taxed under Section 115-O and the answer is to be found in Tata Tea Company Ltd. (supra), where it is held that DDT is a t....
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....a 2 entitles the source state to tax the dividend paid in accordance with its domestic laws, but imposes a fetter viz. the tax so charged cannot exceed the rate of 10% under Article 11(2) (b) if the resident of UK is the beneficial owner of the dividend in all cases other than the case falling under Article 11(2)(a) where dividend is being paid out of income derived directly or indirectly from immovable properties, subject to such income from immovable property being exempt from tax. Article 11 therefore, restricts the right of India, as a source State, to levy tax in accordance with its domestic laws, that is, Section 115-O, but instead of the rate prescribed for therein, the tax has to be levied at the minimum rate of 10% to the extent the dividend is paid to a resident of UK. The BFAR erred in holding the respondent's submission by merely following the special bench's ruling stating that in order to invoke Article 11, the shareholder has to be taxed in India on the dividend earned from India. On a plain reading of the said Article, it is evident that the person on whom the tax on dividend is levied is an irrelevant and extraneous consideration for its application. There ....
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....eign Company, formed and registered under the laws of Japan and hence is a tax resident of Japan which has its registered office at Osaki Shingawaku, Japan. During the financial year - FY 2010-11 (AY 2011-12), the Company paid dividend of INR 5.45,72,957 to its shareholder company, Mitsui Mining and Smelting Company Limited, Japan and deposited Dividend Distribution Tax ('DDT') of INR 90,63,886 @ 16.61% [Being 15% tax enhanced by 7.5% surcharge and 3% cess] The DDT liability was computed at 16.61% of the dividend paid that is Rs. 90,63,886/- as per the provisions of section 115-O of the Act. However, the tax rate as per Article 10 of the India-Japan DTAA in case the recipient is the beneficial owner of the dividends shall not exceed 10% of the gross amount of the dividend, which according to the assessee was the applicable rate of tax as the dividends was paid to its parent company which is a tax resident of Japan and not @ 15% enhanced by 7.5% surcharge and 3% cess as paid by the assessee company u/s 115-O of the Act. 9.6 We observe that on similar facts, the Hon'ble Bombay High Court in the case of Colorcon Asia Pvt. Ltd. vs. Joint Commissioner of Income Tax, Special R....