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Income Tax Appellate Tribunal, “I” BENCH
Before: SHRI B R BASKARAN & SHRI PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL, “I” BENCH MUMBAI. BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1370,1371 & 1372/MUM/2022 (AY:2015-16, 2016-17,2017-18)
DCIT 1(2) (1) Mumbai, Vs. Blue Dart Express Ltd. Room No. 535, Blue Dart Centre, Aayakar Bhavan, Sahar Airport Road, M.K.Road, Andheri(E), Mumbai- 400020. Mumbai- 400099. �थायी लेखा सं./जीआइआर सं.PAN/GIR No.AAACB0446L (अपीलाथ�/Applicant) (��यथ�/Respondent)
Applicant by Mr.SumenduKumarDash.DR Respondent by None.
सुनवाई क� तार�ख/Date of Hearing 18.05.2023 घोषणा क� तार�ख/Date of Pronouncement 15.06.2023 ORDER PER PAVAN KUMAR GADALE, JM: The three appeals are filed by the Revenue against the separate orders of Commissioner of Income Tax(CIT(A)) NFAC Delhi, passed u/s. 250 of the Act.
At the time of hearing, the Ld.DR has submitted that for the A.Y 2015-16 & A.Y 2016-17, the service of the CIT(A) order is 6-10-2021 as per Form no 36 and the appeals were filed with the Income Tax Appellate Tribunal on 26- 05-2022 and there is a delay of 172 days in filing the appeals before the Hon’ble Tribunal and explained that due to Covid-19 pandemic, the filling was delayed and relied on
2 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai the decision of Hon’ble Supreme Court in respect of extension of period of limitation. We find the registry has issued defect notice to the assessee mentioning the delay of 172 days in filling the appeals. On application of the ratio of decision of the Honble Supreme court on extension of limitation period, we are satisfied with the reasonable cause explained for the delay in filling the appeal and accordingly we condone the delay and admit the appeals.
On the date of hearing on 11.05.2023, at the request of the assessee by letter dated 09.05.2023, the case was adjourned to 15.05.2023. Again on the date of hearing i.e 15-05-2023 at the request of the assessee by letter dated 15-05-2023 the case was adjourned to 18.05.2023 as last chance to the assessee. Whereas on the said date of hearing i.e 18-05-2023 non appeared on behalf of the assessee and we heard the Ld.DR submissions and perused the material on record and concluded the hearing of the appeals.. Subsequently the assessee has filed the written submissions dated 24.05.2023 on 26.05.2023 and further on 02.06.2023 the assessee has filed the synopsis chart on the grounds of appeals of the revenue. We have considered the Ld.DR submissions, material on record, written submissions and the synopsis chart filed by the assessee and decided the Appeals..
Since, the issues in these three appeals are common and identical, hence are clubbed, heard and consolidated order is passed. For the sake of convenience, we shall take up the ITA No. 1370/Mum/2022 for the A.Y. 2015-16 as a
3 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai lead case and the facts narrated. The revenue has raised the following grounds of appeal:
"Whether as per Law, the dividend declared by the assessee is income in the hands of the shareholders in view of the provisions of Section 10(34) r.w.s.115(0) of the Act?"
"Whether as per Law, the Dividend Distribution Tax (DDT) paid by the assessee on dividend distributed is tax paid on the income of share-holders from such dividend?"
"Whether the Dividend Distribution Tax (DDT) paid by the assessee in relation to Foreign share-holders is payable @20% as per Act or @ 10% as per Treaty?"
The brief facts in the case are that the assessee company is engaged in the business of express air cargo services. The assessee has filed the return of income for the AY: 2015-16 on 27-11-2015 disclosing a total income of Rs.201,51,37,770/- , and the Books profits U/sec115JB of the Act computed at 188,71,95,976/-. Further the assessee has filed the revised the return of income on 30-03-2017 disclosing same total income as per original return of income filed. Subsequently, the case was selected for scrutiny under CASS and notice u/s. 143(2) and U/sec142(1) of the Act along with the question was issued. In compliance to notice, the assessee has filed the details and information. The Assessing Officer (A.O) found that the assessee has entered in to international transactions with its Associate enterprise (A.E) and with the prior approval of Pr.CIT-9, a reference was made to the Transfer Pricing Officer(TPO) for
4 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai determination of ALP. Whereas the T.P.O has considered the assesses submissions, and documents on the transactions with its AE’s and observed that no adjustment is warranted in respect of ALP and passed order U/sec92CA(3) of the Act dated 18.10.2018.
The A.O. on perusal of the financial statements found that the assessee has received dividend income of Rs.4,84,02,163/- and claimed exempt and no disallowance was made U/sec14A r.w.r 8D and the notice u/sec142(1) of the Act was issued. The assessee has filed the reply by letter dated 02.01.2018, mentioning that no disallowance was made as there are no expenses directly or indirectly incurred for earning exempt income and further no borrowed funds have been used for making investment in liquid mutual funds and the investments are out of surplus idle funds available to the assessee. Whereas, the assessee has made investment of Rs.18,30,81,00/- in M/s Blue Dart Aviation Ltd a group Company and Rs,1,46,30,000/- was made in M/s Concorde Air Logistics Ltd ( 100% subsidiary of the assessee Company).The Assessing Officer found the submissions are not tenable and invoked the provisions of section 14A of the Act r.w.r 8D and computed disallowance of Rs.9,06,719/- On the second disputed issue, the assessee has filed submissions vide letter dated 12.12.2018 mentioning that the Dividend Distribution Tax (DDT) on dividend declared and paid by the Blue Dart to DHL Singapore would be circumscribed to 10% under the India-Singapore DTTA. Since, the Blue Dart (assessee) has paid DTT at a rate in excess of 10%, it is entitled
5 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai for refund of excess DTT paid of Rs. 27.96 Crores . Whereas, the AO observed that the claim of refund of excess DDT paid is not acceptable and assessed the total income of Rs.201,60,44,489/- and passed order u/s. 143(3) of the Act on 30.12.2018.
Aggrieved by the assessment order, the Assessee has filed an appeal with the CIT(A). In the Appellate Proceedings the CIT(A) considered the grounds of appeal, submissions of the assessee, findings of the scrutiny assessment and allowed the disputed issue of refund of excess DTT paid in favour of the assessee and has observed at Page19 Para5.3 of the order read as under:
“5.3. Identical kind of issue was agitated by the appellant in its appeal for AY 2016-17. The appeal for that year was decided by me as under:
QUOTE: 6.2 Assesse paid dividend of Rs.47,45,54,680/- to DHL Singapore
which was holding 75% share of assesse company DDT on that was determined at Rs. 9,66,08,167/- u/s 115-0 of the Act. The dividend recipient was Singapore tax resident and as per article 10 of India- Singapore DTAA, the tax rate on dividend should be 10% only It was argued by assessee that the AO wrongly applied the decision in case of Goetz (India) Ltd. vs. CIT(2006) 157 taxman 1(SC). It was stated that the AO failed to follow CBDT's Circular No.14 (XL-35) dated 11.04.1955.It was stated that appellant is entitled to additional claim not contained in the return of income To this effect, reliance was placed on following decision.
(i)NTPC Ltd vs CIT (1998)2291TR 383(SC)
(ii) Jute Corporation of India vs CIT [1991] 187 ITR 688(SC)
6 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai (iii) CIT Vs.Pruthvi Brokers and Shareholders Pvt. Ltd (2012) 349 ITR 331 (Bombay).
6.2.1 On the merit it was argued that dividend is tax on shareholder Reliance was placed in decision in case of UOI VS. Tata Tea Ltd (2017) 398 ITR 260(SC). In this case the shareholder is a non-resident and taxability is guided by provision of DTAA between India and Singapore. It was stated that in an identical case of Giesecke & Devrient (India) Pvt Ltd. vs Addl. CIT in ITA No.7075/Del/2017 decided on 13.10.20, Hon'ble Delhi Tribunal had taken a view that the tax rate u/s 115-0 is to be determined by the rate prescribed in the DTAA between India and concerned foreign government.
6.3. I have considered the matter From a reading of the assessment order, it is seen that the AO simply rely on decision in case of Goetz (India) Ltd. (Supra) and rejected the claim of assessee. Hon'ble Jurisdictional High Court, in the case of Pruthvi Brokers and Shareholders (Supra) held as under:
It was then submitted by Mr Gupta that the Supreme Court had taken a different view in Goetze (India) Ltd (supra). We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Comp. Ltd. (supra) The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought to claim a deduction by way of a letter before the Assessing Officer The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that
7 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Co. Ltd. (supra) contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held-
The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961 There shall be no order as to costs." [Emphasis supplied]
It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the
8 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai judgment does not impinge on the power of the Tribunal under section 254,"
Respectfully following the binding decision of Hon'ble Jurisdictional High Court, it is held that assessee is entitled to claim deduction/allowance which it might not have claimed at the time of filing its return.
6.3.1 Coming to the merit. Article 10 of DTAA between Singapore and India is extracted as under:
the rate of 20.14% for AY 201516, it is entitled to a refund of the excess DDT deposited of Rs.27,96,44,031/-.
It is further stated that there is no provision for claiming the refund of excess DDT paid in the Income Tax Return (ie., Form ITR-6) Consequently, it was not possible for the Appellant to make the refund claim in its return.
1 Given the above, we request Your Honour to direct the Assessing officer to grant refund of the excess DDT paid to the Appellant. UNQUOTE
5.3. Identical kind of issue was agitated by the appellant in its appeal for AY 2016-17. The appeal for that year was decided by me as under
QUOTE: 6.2 Assesse paid dividend of Rs.47,45,54,680/- to DHL Singapore which was holding 75% share of assesse company DDT on that was determined at Rs.9,66,08,167/- u/s 115-0 of the Act. The dividend recipient was Singapore tax resident and as per article 10 of India- Singapore DTAA, the tax rate on dividend should be 10% only. It was argued by assessee that the AO wrongly applied the decision in case of Goetz (India) Ltd, vs. CIT[2006] 157 taxman 1(SC). It was stated that the
9 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai AO failed to follow CBDT's Circular No. 14 (XL-35) dated 11.04.1955. It was stated that appellant is entitled to additional claim not contained in the return of income. To this effect, reliance was placed on following decision:
(i) NTPC Ltd vs CIT (1998)2291TR 383(SC)
(ii) Jute Corporation of India vs CIT [1991] 187 ITR 888(SC)
(iii) CIT Vs.Pruthvi Brokers and Shareholders Pvt Ltd (2012) 349 ITR 331 (Bombay)
6.21 On the merit it was argued that dividend is tax on shareholder Reliance was placed in decision in case of UOI VS. Tata Tea Ltd (2017) 398 ITR 260(SC). In this case the shareholder is a non-resident and taxability is guided by provision of DTAA between India and Singapore. It was stated that in an identical case of Giesecke & Devrient (India) Pvt. Ltd. vs Addl. CIT in ITA No. 7075/Del/2017 decided on 13.10.20, Hon'ble Delhi Tribunal had taken a view that the tax rate u/s 115-0 is to be determined by the rate prescribed in the DTAA between India and concerned foreign government.
6.3 I have considered the matter From a reading of the assessment order, it is seen that the AO simply rely on decision in case of Goetz (India) Ltd. (Supra) and rejected the claim of assessee. Hon'ble Jurisdictional High Court, in the case of Pruthvi Brokers and Shareholders (Supra) held as under:
It was then submitted by Mr Gupta that the Supreme Court had taken a different view in Goetze (India) Ltd (supra) We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National
10 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai Thermal Power Comp. Ltd. (supra). The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought to claim a deduction by way of a letter before the Assessing Officer The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Co. Ltd. (supra) contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held-
"4. The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961 There shall be no order as to costs." [Emphasis supplied]
11 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai 23. It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254."
Respectfully following the binding decision of Hon'ble Jurisdictional High Court, it is held that assessee is entitled to claim deduction/allowance which it might not have claimed at the time of filing its return.
6.3.1 Coming to the ment, Article 10 of DTAA between Singapore and India is extracted as under:
1 Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2 However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed.
(a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which owns at least 25 per cent of the shares of the company paying the dividends,
(b) 15 per cent of the gross amount of the dividends in all other cases.
12 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
Notwithstanding the provisions of paragraph 2 of this Article, as long as Singapore does not impose a tax on dividends in addition to the tax chargeable on the profits or income of a company, dividends paid by a company which is a resident of Singapore to a resident of India shall be exempt from any tax in Singapore which may be chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
The term "dividends" as used in this Article means income from shares or other rights not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company except insofar
13 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai as such dividends are paid to a resident of that other State or so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
(a)Dividends shall be deemed to arise in India if they are paid by a company which is a resident of India;
(b) Dividends shall be deemed to arise in Singapore:
(i)if they are paid by a company which is a resident of Singapore. or
(ii) if they are paid by a company which is a resident of Malaysia out of profits arising in Singapore and qualifying as dividends arising in Singapore under Article VII of the Agreement for the Avoidance of Double Taxation between Singapore and Malaysia signed on 26th December, 1968.
Assessee's contention is that the rate of tax u/s 115-0 should be 10% in accordance with provision of DTAA. Hon'ble Delhi Tribunal dealt with similar type of issue in the case of Giesecke & Devrient(India) Pvt Ltd (Supra). Relevant parts are extracted as under:
Quote: ADDITIONAL GROUNDS
Vide application dated: 11.09.2019, the assessee has raised the following additional grounds of appeal:
"Ground 3.1: That the Assessing Officer ("AO") erred in not extending the shareholder (Giesecke&Devrient GmbH) benefit of applicable Double
14 ITA . No. 1370,1371 & 1372/MUM/2022. M/s Blue Dart Express Limited .Mumbai Taxation Avoidance Agreement between India and Germany ("DTAA " qua the rate of tax on payment of dividend to the Ground 3.2: That the AO failed to appreciate that the divider d income was that of the non- resident recipient who was governed by the provisions of relevant DTAA
Ground 3.3: That the AO also failed to appreciate that in terms of section 90(2) read with section 10(34) of the Act the income being taxable in the hands of non-resident could not be subjected a rate in excess of the rate prescribed under the DTAA and hence, erred in subjecting the Appellant to additional income tax in terms of section 115-0 of the Act.
Ground 3.4: That the AO erred in not granting refund of the excess Dividend Distribution Tax paid by the Appellant, since as per the provisions of Section 237 of the Act read with Article 265 of the Constitution of India, only legitimate tax could have been retained."
35 The Id. counsel vehemently stated that the additional grounds raise a purely legal issue and, therefore, as per the ratio laid down by the Hon'ble Supreme Court in the case of NTPC 229 ITR 383, the same deserves to be admitted and adjudicated.
The Id. DR strongly opposed to the admission of additional grounds. The Id DR vehemently stated that this issue was never taken before the assessing officer nor before the DRP and it is nothing but a malafide attempt to distort the appellate proceedings. It is the say of the Id DR that the issues raised vide additional grounds are not only legal issues but also need verification of facts. The Id. DR further stated that the lower authorities have followed due process of law and there was no denial of natural justice and this action of the assessee is nothing short of malafide.