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Facts
The assessee, HDFC ERGO General Insurance Company Limited, paid Dividend Distribution Tax (DDT) at a rate higher than that prescribed by the India-Germany DTAA to its German promoter. The initial assessments were completed under Section 143(3). Subsequently, the assessee filed fresh appeals specifically challenging the DDT levy under Section 115O, but these appeals were delayed by 2025 days and consequently dismissed in limine by the CIT(A) as time-barred.
Held
The ITAT, citing judicial precedents, held that the issue of excess DDT under Section 115O is an independent matter requiring a separate appeal under Section 246A. It directed the CIT(A) to admit the delayed fresh appeals, condone the delay, and adjudicate the issues on their merits after providing the assessee a reasonable opportunity of being heard. The assessee was instructed not to press the identical ground in its original appeals.
Key Issues
1. Whether a separate appeal is required for challenging Dividend Distribution Tax (DDT) levy under Section 115O. 2. Whether the delay in filing such separate appeals should be condoned due to evolving judicial interpretations and bona fide belief. 3. Applicability of concessional DDT rate under DTAA versus domestic law.
Sections Cited
143(3), 115O, 90(2), 244A, 246A
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, VP & SHRI PRABHASH SHANKAR, AM
O R D E R Per Bench:
The captioned appeals by the assessee arise out of separate orders, all dated 28.02.2025, passed by learned Commissioner of Income Tax (Appeals)-54, Mumbai (‘ld.CIT(A) for short) dated 28.02.2025, pertaining to the assessment years (A.Ys.) 2014- 15 to 2017-18.
2. The grounds, which are common in all the appeals except variance in figure, read as under: 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), CIT(A)-54, Mumbai ['learned CIT(A)'] has erred in not admitting separate appeal filed by the Appellant against the assessment order (DDT order) dated 30-Dec-16 passed under Section 143(3) read with Section 115-0 of the Income-tax Act, 1961 ('the Act') dealing with to 2869/Mum/2025 (A.Ys.2014-15 to 2017-18) HDFC ERGO General Insurance Company Limited vs. Dy. CIT applicability of rate of dividend distribution tax (DDT) on dividend paid by the Appellant to its German promoter shareholder, ERGO International AG (ERGO).
On the facts and under the circumstances of the case and in law, the learned CIT(A) has erred in not condoning the delay in filing separate appeal before him against the DDT order.
3. On the facts and under the circumstances of the case and in law, the learned CIT(A) has erred in passing the impugned order without affording the Appellant a reasonable opportunity of being heard.
4. On the facts and under the circumstances of the case and in law, the learned CIT(A) has erred in dismissing the appeal without adjudicating the issue on merits of the case and thereby passed the order in violation of the principles of natural justice.
5. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the order passed by assessing officer to assess the rate of DDT payable under the provisions of the Act on dividend declared and paid by the Appellant to its foreign promoter shareholder ERGO, a tax resident of Germany, at the rate of 16.995 percent (inclusive of applicable surcharge and education cess).
6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not restricting the rate of DDT payable to 10 percent of gross dividend paid to ERGO in accordance with Article 10 of the India-Germany Double Taxation Avoidance Agreement ('DTAA'), being more beneficial than the provisions of the Act as per section 90(2) of the Act.
On the facts and under the circumstances of the case and in law, the learned CIT(A) grossly erred in not determining and granting refund of INR 47,99,549, being the excess DDT paid by the Appellant.
8. On the facts and under the circumstances of the case and in law, the learned CIT(A) grossly erred in not allowing interest under section 244A of the Act on the refund arising from the excess DDT paid by the Appellant
Briefly, the facts are, the assessee is a resident corporate entity and stated to be engaged in the business of underwriting general insurance policies. The assessments in case of assessee were completed u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’ for short).
Against the assessment orders so passed, the assessee filed appeals before learned First Appellate Authority within the prescribed period of limitation. After filing the appeals as aforesaid, the assessee qua the payment of dividend to ERGO International AG filed additional grounds seeking relief of concessional rate on Dividend Distribution Tax (DDT) as per the rate prescribed under the relevant Double Taxation Avoidance during the pendency of appeals before learned First Appellate Authority, the Bangalore Bench of the Income Tax Appellate Tribunal passed an order saying that against the levy of DDT u/s. 115O of the Act, the appeal does not lie from the assessment order, hence, a separate appeal has to be filed, specifically challenging the levy of DDT. In terms with the decision rendered by the Bangalore Bench of the Tribunal in case of JCIT vs. Texas Instruments (India) Pvt. Ltd. in IT(TP)A No. 525/Bang/2019 dated 23.02.2022, as also in the case of Genpact India vs. DCIT [2019] 419 ITR 440 (SC), the assessee filed fresh appeals before learned First Appellate Authority, specifically challenging levy of DDT u/s. 115O of the Act. However, such appeals were filed with delay of 2025 days. Being of the view that the appeals filed by the assessee are grossly barred by limitation and the assessee did not offer any satisfactory explanation regarding cause of delay, learned First Appellate Authority dismissed the appeals in limine without condoning the delay.
Before us, ld. Counsel appearing for the assessee submitted that while deciding identical nature of dispute in assessee’s case in A.Y. 2018-19, the Tribunal has restored the issue to the file of learned First Appellate Authority to adjudicate the appeal on merits after condoning delay. Thus, he submitted that similar direction needs to be given in respect of these appeals.
The learned Departmental Representative ('ld. DR' for short) fairly agreed that the Tribunal indeed has restored identical nature of dispute to the file of learned First Appellate Authority with a direction to adjudicate the appeals on merits. of dispute concerning dismissal of assessee’s appeal challenging levy of DDT in terms with rates prescribed u/s. 115O of the Act, the Tribunal in in A.Y. 2018-19 has passed an order dated 08.07.2025, directing as under:
We heard the rival submissions and considered the documents available in the record. Ground No. 13 of the appeal before 1st appellate authority corresponding Ground No.6 of the appeal of the assessee in for A.Y. 2018-19, relating to refund of excess DDT paid under Section 115-0 of the Act, was rejected by the Ld. CIT(A) citing lack of specific submissions. The assessee declared and paid dividend of Rs.58.44 crores to ERGO International AG, a German resident, and paid DDT of Rs.11.89 crores at 20.35765%. The DDT, being higher than the DTAA-prescribed rate of 10%, was claimed as excess tax paid. The assessee raised the issue before the Assessing Officer during assessment, but the same was not addressed in the assessment order. A separate appeal was thus filed to comply with judicial precedent, with an undertaking not to press the DDT ground in the original appeal once the fresh appeal is admitted. The assessee also cited binding precedents including Giesecke & Devrient (India) Pvt Ltd, [2020] 120 taxmann.com 338 (Delhi - Trib.), where it was held that DTAA provisions would prevail over the domestic law rate of DDT. However, in light of the legal principles laid down by the ITAT in Texas Instruments (India) Pvt Ltd (supra) and the Hon'ble Supreme Court in Genpact India Pvt Ltd (supra), we hold that the issue of excess DDT paid under Section 115-0, being independent of the assessment of total income under Section 143(3) of the Act, must be adjudicated in a separate appeal under Section 246A of the Act. The fresh appeal filed by the assessee before the Ld. CIT(A) on this issue shall be admitted and adjudicated on merits, and delay in filing the same shall be condoned, in view of the bona fide belief entertained by the assessee based on evolving judicial interpretations. The assessee shall be given a reasonable opportunity of being heard before the Ld. CIT(A), and a speaking order shall be passed after considering the submissions made and legal precedents cited. Upon admission of the fresh appeal, the assessee shall not press Ground No. 13 related to DDT in the original appeal bearing no. NFAC/2017-18/10020556 (related Ground no-6 of the appeal before ITAT in to avoid duplication. Following the order of Hon'ble Apex Court in Genpact India (P.) Ltd (supra) & order of the coordinate bench in Texas Instruments (India) Pvt Ltd (supra), the matter related to DDT refund is directed to be adjudicated exclusively in the fresh appeal filed before the Ld. CIT(A) under Section 246A of the Act by a speaking order. The Ld. CIT(A) is directed to admit and adjudicate the fresh appeal on DDT filed independently by the assessee. In the interest of justice, we direct the Ld. CIT(A) to condone the delay and pass a reasoned and speaking order on merits. and no findings are given on merits at this stage.
Finding parity of facts, we set aside the impugned orders of learned First Appellate Authority and restore the issues arising in present appeals to the file of learned First Appellate Authority for adjudication on merits after condoning delay in terms with the direction given by the co-ordinate bench in appeal decided for A.Y. 2018-19. Further, in to 2869/Mum/2025 (A.Ys.2014-15 to 2017-18) HDFC ERGO General Insurance Company Limited vs. Dy. CIT terms with the earlier order of the co-ordinate bench, we direct the assessee not to press identical ground raised in the original appeals, which are said to be pending before learned First Appellate Authority.
In the result, all the appeals by the assessee are allowed for statistical purpose.