DENSO INTERNATIONAL INDIA PRIVATE LIMITED,DELHI vs. DY. COMMISSIONER OF INCOME TAX, DELHI

ITA No.6688/Del/2025

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “B”NEW DELHI

BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER
AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER

आ.अ.सं/.I.T.A No.6688/Del/2025
िनधा रणवष /Assessment Year: 2019-20

DENSO INTERNATIONAL INDIA PRIVATE
LIMITED,
B-1/D-4, Ground Floor,Mohan
Cooperative Estate,Delhi.
PAN No.AABCD1103D
बनाम
Vs.
LD. DCIT,
Circle 7(1),
C.R. Building, Delhi.
अपीलाथ Appellant
यथ/Respondent

Assessee by Shri Pramod Jain, CA &Shri Mukul Gupta, Advocate
Revenue by Shri Rajesh Kumar Dhanesta, Sr. DR

सुनवाईकतारीख/ Date of hearing:
09.03.2026
उोषणाकतारीख/Pronouncement on 13.03.2026

आदेश /O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
1. This appeal arises from order dated 16.06.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), passed by Addl./JCIT
(Appeals)-1, Noida. In this case, the assessee filed its return of income for AY 2019-20 on 30.11.2019. During processing u/s 143(1) of the Act the Ld. AO, CPC, Bangalore, disallowed a sum of Rs.98,18,811/- u/s 43B of the Act on the ground that the employer’s contribution towards ESI/PF was delayed. The Ld. Addl./JCIT (Appeals) relied on the case of Checkmate Services Pvt. Ltd. reported in 448 ITR 518 (SC) to uphold the action of Ld. AO. The second point of dispute was concerning the refund
2

of excess Dividend Distribution Tax (DDT) paid by the assessee, which was claimed as a refund on the basis that the beneficial treaty provisions
(India-Japan DTAA) permitted such refund.
1.1
The aggrieved assessee approached the ITAT and has filed revised grounds as under: -
“1. That the Ld. CIT(A) erred in passing the impugned order without adjudicating upon the additional ground of appeal raised by the Appellant during the course of appellate proceedings.
2. That the Ld. CIT(A) erred both in law and on facts in failing to adjudicate the additional ground relating to the claim of excess
Dividend Distribution Tax (DDT) paid amounting to Rs.77,24,055/-.
3. The order passed by Ld. CIT(A) and Ld. AO is bad in law and against the facts of the case.
4. That the Ld. CIT(A) erred in sustaining the adjustment u/s 143(1)(a)(ii) of the Act, by the Ld. AO(CPC).
5. That the Ld. CIT(A) erred in sustaining the adjustment u/s 143(1)(a)(iv) of the Act, by the Ld. AO(CPC).
6. That the Ld. CIT(A) erred in sustaining the disallowance made by the Ld. AO u/s 43B on account of employer contribution to employees provident fund trust.
7. That the Ld. CIT(A) erred in sustaining the addition made by the Ld.
AO making a disallowance of Rs.98,18,111/- u/s 43B which was paid after finalization of audit report but before filing of audit Income
Tax return.
8. That the appellant carves leave to add, alter, modify or delete any of the ground or appeal.”
2. Before us the Ld. AR argued that a distinction needed to be drawn between the employers’ contribution to PF/ESI and the employees’
contribution towards the same. It was the submission that the Checkmate
Services case (supra) drew a clear distinction between the provisions of section 43B of the Act and section 36(1)(va) of the Act. It was argued by 3

the Ld. AR that the Checkmate Services case (supra) pertained to the employees’ contribution and not the employers’ contribution. It was pointed out by the Ld. AR that this was a case where the employers’
contribution was impugned and was disallowed even when such contributions were deposited before filing of the return of income, as mandated u/s 43B of the Act.
2.1
Regarding the claim of refund of excess DDT, the Ld. AR read out from a synopsis of argument as under: -
“Claim for Refund of Excess DDT Paid by Applying Beneficial Treaty Rate under the India-Japan DTAA
•
The Appellant had specifically raised an additional ground of appeal before the Ld. CIT(A) seeking adjudication of its claim for excess Dividend Distribution Tax (DDT) paid amounting to Rs.
77,24,055/-.

•
The application quantifies the excess DDT as the difference between DDT paid of Rs.1,50,41,762/- and DDT payable at 10%
under the India-Japan tax treaty of Rs.73,17,707/-, resulting in excess DDT of Rs.77,24,055/-.

•
The dividend income in the hands of the non-resident shareholder was taxable only at the treaty rate and, therefore, excess DDT had been paid by the Company.
Despite the specific raising of this ground, the Ld. CIT(A) failed to adjudicate the same in the impugned appellate order.
•
During the relevant year, the company declared and distributed dividend of about Rs.7.31 crore to its shareholder, Denso
Corporation, Japan, and paid DDT of about Rs. 1.50 crore under section 115-O at the domestic rate.
•
Since the dividend was paid to a non-resident shareholder resident of Japan, the taxability of such dividend had to be examined in light of Article 10 of the India- Japan DTAA, under which the tax rate should not exceed 10%.

•
On that basis, the DDT actually payable worked out only to about
Rs.73.17 lakh, whereas the company had already paid about
Rs.1.50 crore. Therefore, the assessee company claimed the excess amount of Rs.77,24,055/- had been paid.
4

•
In other words, the dispute is not whether DDT was paid, but whether it was paid at a higher rate than what was legally payable after considering the treaty benefit. The refund claim arises only because the company says it paid tax at the domestic rate first, though the treaty capped the tax burden at 10%.

•
Therefore, raised an additional ground before the C1T(A) seeking refund of this excess DDT, arguing that the treaty benefit should have been extended even in relation to DDT paid on dividend to its Japanese shareholder.”
The Ld. AR also placed on record several decisions of coordinate benches of ITAT and specifically relied on the case of Intertek India Private
Limited in ITA Nos. 2903 & 2904/Del/2025, order dated 07.11.2026. The Ld. AR read out para 6.1 at page 5 of this order in his support as under: -
“6.1. We have heard the rival submissions and perused the materials available on record. The short issue in dispute is assessee company had paid dividend to its non-resident shareholder. The assessee company had suffered dividend distribution tax at the rate of 20.36 percent in terms of section 1150 of the Act. For the dividends paid to non-resident shareholder, the assessee wanted to claim the benefit of reduced rate of tax of 10 percent as provided in Article 11 of India UK
DTAA on the pretext that treaty provisions would override the domestic law. Accordingly, the plea of the assessee was that dividend distribution tax is liable only at the rate of 10 percent in respect of non-resident shareholder as against 20.36% remitted by the assessee. Hence the assessee is seeking refund of excess dividend distribution tax paid which was denied to the assessee by placing reliance on the decision of Special Bench of Mumbai
Tribunal in the case of DCIT vs. Total Oil India Private Limited reported in 104 ITR (T) 1 (Mumbai-Trib) (SB). The Learned AR before us submitted that this Special Bench of Tribunal decision has been reversed by the Hon’ble Bombay High Court in Tax
Appeal No. 6 of 2024 dated 28-11-2025 reported in 181
taxmann.com 301 (Bom HC). We find that the Hon’ble Bombay
High Court had held that where a resident company paid dividend to its UK parent company, since such payment was in nature of dividend covered under definition of ‘dividend’ under Article 11
of India-UK DTAA and section 115-0, assessee was entitled to restrict tax rate on dividends distributed by it to its UK parent company to 10 per cent under Article 11. Respectfully following the said decision of Hon’ble Bombay High Court, we direct the Learned AO to refund the excess dividend distribution tax paid by 5

the assessee company. Accordingly, the Ground Nos. 4 to 8 raised by the assessee are allowed.”
3. The Ld. DR relied on the case of Checkmate Services (supra) and stated that there was no infirmity in the first appellate order. Regarding
DDT it was argued by the Ld. DR that the assessee had not claimed this excess in the return of income and had tendered a claim only at first appellate stage.
4. We have carefully considered the rival submissions and have gone through the records before us. We have also perused the cases relied on by the Ld. AR. We find strength in the assessee’s arguments that the Checkmate Services case (supra) draws a clear distinction between employers’ contribution to PF & ESI as being governed u/s 43B of the Act, where there is leverage for depositing such contribution before the due date of filing the return of income,as against this the contribution of the employees is governed by section 36(1)(va) of the Act. On this the Hon’ble Apex Court has clearly directed that such contributions should be deposited in the Government Account as per the respective Acts. Thus, in this case, we direct the Ld. AO to verify if the PF/EPF with respect to the employers’ contribution has been deposited before the due date of filing the return, and in case that has happened then the assessee must be allowed deduction for the same. Secondly, regarding the DDT refund, we are persuaded by the finding given in the case of Intertek India
(supra) and direct the Ld. AO to refund the excess DDT paid by the 6

assessee. We hasten to add that the correct figure of such excess would be duly worked out by the Ld. AO, with the help of the assessee.
5. In the result, this appeal is partly allowed.
Order pronounced in the open court on 13.03.2026 (CHALLA NAGENDRA PRASAD)
ACCOUNTANT MEMBER
Dated: 13.03.2026
*Kavita Arora, Sr. P.S.