Loading judgment…
Facts
The assessee, Indian Oil Petronas Pvt. Ltd., engaged in LPG processing, paid dividend distribution tax (DDT) under Section 115-O, including a significant amount to its Malaysian joint venture partner. It claimed a refund of the DDT, arguing that the Double Taxation Avoidance Agreement (DTAA) with Malaysia limited the tax payable on DDT to 5%, which the AO did not accept.
Held
The Tribunal dismissed the appeals, upholding the CIT(A)'s decision. It relied on the Special Bench Mumbai Tribunal's ruling that DDT under Section 115-O is a tax on the company's income and not on the shareholder, hence the DTAA provisions are not applicable to it.
Key Issues
Whether the Double Taxation Avoidance Agreement (DTAA) provisions apply to the dividend distribution tax (DDT) paid by a domestic company under Section 115-O on dividends distributed to its non-resident shareholders.
Sections Cited
115-O
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
These are appeals preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals), Kolkata-22, (hereinafter referred to as the “Ld. CIT(A)”]even dated 31.01.2024 for the AYs2017-18 & 2018-19.
The issue involved in both these appeals same as under: -
“Whether, on a true and harmonious construction of the provisions of the Act, the tax liability of a domestic company, like the appellant, on the dividend distributed to its. non-resident shareholders shall be at the rate as applicable in the respective DTAA as the same is more beneficial to the appellant comparing the rates prevailing under the provisions of section 115-0 of the Act?”
Aggrieved assessee preferred the appeal before the ld. CIT (A). However, the ld. CIT (A) dismissed the appeal of the assessee by following decision of the Special bench Mumbai Tribunal in case of DCIT Vs. Total Oil India Pvt. Ltd. in (2023) 104 ITR (Trib) 1 [ITAT (Mum)(SB)].
After hearing the rival contentions and perusing the materials available on record, we find that in the order of the ld. CIT (A), we note that the ld. CIT (A) has followed the Special bench decision of
In the result, both the appeals of the assessee are dismissed.
Order pronounced in the open court on 29.07.2025.