MITSUI KINZOKU COMPONENTS INDIA PVT LTD,REWARI vs. INCOME TAX OFFICER, ITO WARD TWO

2.1 Thereafter the assessment proceedings under section 143(3) of the Act were completed on 27.02.2015 accepting the returned income. Subsequently, pursuant to the Supreme Court decision on 20 September 2017 in the case of Tata Tea Co. Ltd. [2017] 85 taxmann.com 346 (SC) and the Delhi Tribunal decision in the case of Giesecke & Devrient [India] Pvt Ltd passed on 13 October 2020, wherein it was held that DDT is tax on dividend income of the shareholder and thus, the beneficial tax rates of the Double taxation avoidance agreement is applicable, the assessee filed an application under section 237 of the Act with the AO on 27 November 2020 requesting to determine the refund of excess DDT paid of Rs. 36,06,590/- @ 6.61 % (16.61-10), followed by reminder letters on 12 February 2021, 23 June 2021, and 14 July 2021. Consequent to the above, the assessing officer passed an order dated 21.09.2021 under section 237 of the Act, rejecting the claim of refund on the ground that no claim was made in the income-tax return as mandated by section 239 of the Act. The relevant extract of the said order is reproduced as below: Mitsui Kinzoku Components India Pvt. Ltd. “2. In this regard, the Assessment Year wise claims of the assessee company and the comments of the undersigned are enumerated hereunder: (i) A.Υ. 2011-12: As per the representation filed by the assessee, M/s. Mitsui Kinzoku Components Private Limited during the previous year relevant to A.Y. 2011-12 has made the payment of DDT of Rs. 90,63,886/- under section 1150 at the rate of 16.61% (15% tax + 7.5% Surcharge + 3% Cess) against the payment of Dividend of Rs. 5,45,72,957/- to its shareholders. It has been further mentioned that tax rate of 10% is applicable on the distribution of dividends as per Article 10 of Indo-Japan Double Taxation Avoidance Agreement (DTAA) on the tax resident of Japan. Accordingly, the assessee vide its representation has requested the undersigned to issue an order u/s. 237 of the Act determining the refund of excess DDT paid of Rs. 36,06,590/- @ 6.61% (16.61-10). 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.”

“ 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 the fact that the utility for filing income- tax return does not allow alteration of the rate at which dividend is to be paid and hence the appellant was barred by income-tax utility for claiming the refund in its income-tax return. 1.2 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 the binding CBDT circular No. 14 (XL- 35) dated 11 April 1955 which provides that officers of the Department must not take advantage of ignorance of an assessee as to his rights and assist taxpayers in every reasonable way, particularly in the matter of claiming and securing reliefs.

.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd. 2. That on the facts and circumstances of the case and in law, the Ld. AO has erred in law and on facts of the case by not allowing refund for excessive tax paid under section 115-0 of the Act in view of the beneficial and provisions of the double taxation avoidance agreement between India and Japan.”

3.1 On the basis of above grounds and submissions, the assessee made the following prayer before the Ld. CIT(A).

“ 3.1 It is humbly prayed before your goodself that DDT being a tax on the dividend income of the shareholder, is subject to both, India-Japan tax treaty and Income tax Act, 1961 provisions. Accordingly, pursuant to Section 90(2), which enables a taxpayer to offer tax basis the tax treaty, if the same is more beneficial, MKCI is eligible to claim benefit of Article 10, which provides for dividend taxation @ 10%. Accordingly, a refund of INR 36,06,590/- (as enumerated below) being excess DDT paid, is due to the MKCI and be kindly granted. Assessment Amount Amount Refund to Date of year of DDT of DDT (Rs.) payment as per as per of DDT section Treaty (Rs.) 115-O Rate @ (Rs.) 10% (Rs.) 2011-12 90,63,886 54,57,296 36,06,590 09 June 2010

4. The Ld. CIT(A) did not accept the above claims of the assessee. The relevant extract of the order of Ld. CIT(A) rejecting the ground no. 1 of the appeal is reproduced as under:

“ 4. I have carefully examined the order of the assessing officer, the grounds of appeal and the appellant submissions in the case. In ground no.1, the appellant found fault with the assessing officer in rejecting the claim of refund of the DDT paid by the appellant at the rate prescribed under section 115-0 stating that the utility 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- Mitsui Kinzoku Components India Pvt. Ltd. 35) dated 11 April 1955. With regard to the above ground, it is to be noted that as per the scheme of section 115-0 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 115-0 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 of the appeal of the assessee by relying upon the decision of the Special Bench. Mumbai in the case of Deputy Commissioner of Income Tax Circle 11(3)(1). Mumbai vs Total Oil India Pvt. Ltd. (ITA NO.6997/MUM/2019) dated 20/04/2023.

In ground No.2. the appellant argued for refund of excessive tax paid under section 115-0 of the Act in view of the beneficial and provisions of the double taxation avoidance agreement between India and Japan. The appellant's claim above stems from the decisions of the Hon'ble Delhi ITAT in the case of Giesecke & Devrient [India] Pvt Ltd and Hon'ble Kolkata ITAT in the case of Indian Oil Petronas (P.) Ltd. I have carefully considered the above decisions and subsequent development in the matter and note that the said decisions of coordinate benches of the Tribunal has been reversed by the decision of the Special Bench. Mumbai in the case of Deputy Commissioner of Income Tax Circle 11(3)(1). Mumbai vs Total Oil India Pvt. Ltd(ITA NO.6997/MUM/2019) dated 20/04/2023. The question for consideration before Special Bench was Where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts additional income-tax (tax on distributed profits) referred to in section 115-0 of the Income-Tax Act, 1961 (in short 'the Act'), whether such additional income-tax payable by the domestic company shall be at the rate mentioned in Section 115-0 of the Act or the rate of tax applicable to the non-resident shareholder(s) with reference to such dividend income”

The Hon'ble Special Bench after examining the issue of applicability of the beneficial rate under DTAA to the DDT under section 115-0, held that where dividend is Mitsui Kinzoku Components India Pvt. Ltd. declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec. 115-0 of the Act, such additional income tax payable by the domestic company shall be at the rate mentioned in Section 115 O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. Nevertheless, we are conscious of the sovereign's prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism 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.”

“ 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

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in fact and in law in not directing the Ld. Assessing Officer ('Ld. AO') to grant refund of excess amount of Dividend Distribution Tax ("DDT) of INR 36,06,590 paid on dividend distributed by the Appellant for the captioned year 2.1. The Ld. CIT(A) erred in fact and in law in not appreciating the fact that as per Double Avoidance Taxation Agreement ("DTAA) between India and Japan, the liability of tax on dividend received by the Japan resident does not exceeds 10% of the dividends. Mitsui Kinzoku Components India Pvt. Ltd. 2.2. The Ld. CTT(A) erred in fact and in law in taxing the dividend income paid to the nonresident shareholder in excess of rate specified under DTAA without appreciating the provisions of section 90(2) of the Act in proper perspective. 2.3. The Ld. CIT(A) erred in fact and in law in disallowing the claim made by the Appellant on account of refund of excess DDT paid during the year without appreciating the law in proper perspective.

2.4. That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in law by not allowing refund of excess tax paid under section 115-0 of the Act by relying on the decision of the Hon'ble Special Bench in the case of DCIT v. Total Oil India (P.) Ltd. [2023] 149 taxmann.com 332 (Mumbai-Trib.) (SB) without appreciating the fact that due to incomplete appreciation of legal history, circulars, memorandum and background of the case an incorrect view has been framed by the Hon'ble Special Bench that the provisions of double taxation avoidance agreement does not get triggered when a domestic company pays DDT u/s 115-0 of the Act.”

5.1 Further, the assessee also filed additional grounds of appeal vide letter dated 28.02.2025 and the relevant extract of the same is reproduced as under:

1. This is in reference to the captioned appeal filed by Appellant on 25 August 2024 against the order passed by Hon'ble National Faceless Appellate Centre (Ld. NFAC') dated 26 June 2024 ( impugned order") under Section 250 of the Income-tax Act, 1961 ("Act") for the captioned assessment year. Copy of the order dated 26th June 2024 is enclosed as Annexure 1.

2. The 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.

.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd.

9. Further, the aforesaid ground does not necessitate consideration of new facts, the 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- ITA Nos.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd. "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, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, in long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings. although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee."

11. Thus, we request your Honors to admit the additional ground of the company in the interest of justice and equity. Prayer 12. In light of the above, and in the interest of natural justice, Appellant prays before your Honor to kindly admit and after providing adequate opportunity of hearing to both the parties, adjudicate upon the additional ground appended herewith. Additional Ground of Appeal: Additional ground of appeal:- The Appellant hereby submits the following additional ground of appeal:

On the fact and in the circumstances of the case and in law, Ld. CIT(A) have erred in not appreciating that Section 239 is a procedural requirement for claiming of refund and based on the substantive provisions of Section 237 of the Act read with Article 265 of the Constitution of India, the Appellant should be eligible to claim relief of excess DDT paid of INR 36,06,590/- Without prejudice to above, on the fact and in the circumstances of the case and in law, Ld. CIT(A) have erred in not appreciating that Appellant has complied with the Mitsui Kinzoku Components India Pvt. Ltd. procedural requirement by filing of income tax return for captioned year 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 applicable as on date provide that a claim of refund shall only be made by way of an income-tax return. The extract of Section 239 is enclosed as under for your ready reference: “Every claim for refund under this Chapter shall be made [by furnishing return in accordance with the provisions of section 139 2.18. With regard to the said requirement, it is humbly submitted that as per the income- tax return utility available for filing of the said income-tax return, no option has been Mitsui Kinzoku Components India Pvt. Ltd. granted to the Appellant to apply the beneficial rate of DTAA for computation of DDT liability. Rather DDT payable field in schedule ('DDT") of Form ITR-6 automatically calculates DDT at 16.61%, the said field is not modifiable. Accordingly, the Appellant was is not in a position to claim refund of DDT in its income-tax return. It is further submitted that the filing procedure during the captioned years does not allow the applicant for e-filing of notes. 2.19 It is also submitted before your Honors that it is merely on account of such technical difficulties that the Appellant is unable to claim a tax refund in its income-tax return and therefore, such difficulties which is not on account of the Appellant cannot be used to deny the eligible refund to the Appellant. 2.20 In furtherance to above, it is submitted that since Form ITR-6 does not permit making the DDT refund claim, where a refund is legitimately due to an Appellant under s. 237 of the Act, the same ought not to be denied on mere technical grounds - that the application for claiming refund is not in a prescribed format, or where the prescribed manner of making the claim is incapable of being complied with. 2.21 Reference may further be drawn to Article 265 of the Constitution of India, which provides that only such taxes can be imposed and collected by the authorities which are payable under an authority of statute. However in the instant case, taxes only to the tune of 10% were payable by the applicant on dividends distributed, whereas collection has been paid and retained at 16.61%. 2.22. The Appellant further places reliance on the following judicial precedents, wherein the courts had observed as under: - High Court of Bombay in case of Chamber of Tax Consultants v. Director General of Income-tax (System) [2024] 169 taxmann.com 506 (Bombay) (Refer Pg 208 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 that cases. c) Punjab and Haryana High Court decision in case of Deep Chand Jain v. ITO [1983] 15 Taxman 522 (Punj. & Har.) (Refer Pg 217 to Pg 222 of PB), wherein it was held that Mitsui Kinzoku Components India Pvt. Ltd. the refund of assessee cannot be refused on ground that application was not in prescribed form. The relevant extract of the decision is as under: "Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law... ...Nor could the claim of assessee be refused on technical ground that his application for refund was not on a given prescribed form." d) Madras High Court in case of R. Seshammal v. ITO [1999] 237 ITR 185 (MAD.) (Refer Pg 223 to Pg 224 of PB), held that "The Act is not intended to benefit the state by enabling it to collect or retain monies not payable to it under the Act. What is required to be collected from the assessee is only the tax and other amounts properly payable under the Act." e) High Court of Madras in case of Gopalan Thygarajan v. Commissioner of Income-tax, Chennai-V [2018] 89 taxmann.com 187 (Madras) (Refer Pg 225 to Pg 226 of PB), held that it is an obligation cast on revenue to effect refund, without calling upon assessees to apply for refund claim. f) High Court of Calcutta in case of Indian Aluminium Co. Ltd. v. Deputy Commissioner of Income-tax [1993] 70 TAXMAN 206 (CAL.) (Refer Pg 227 to Pg 228 of PB), held that the claim of refund of the petitioner could not be defeated after the promulgation of the Act. Procedural matters are nothing but handmaids of justice. The substantive claim cannot be defeated by reason of technical defects and/or procedural irregularities. g) High Court of Madras in case of Tara Exports vs Union of India [2018] 98 taxmann.com 363 (Madras) (Refer Pg 229 to Pg 232 of PB), wherein it was held that relief cannot be denied because of technical glitch. 2.23. Hence, in the present case just because the Appellant cannot file the refund claim as provided in Section 237, cannot make him ineligible for such refund. Doing so would be harsh and prejudicial to the Appellant.”

6. At the outset, the Ld. AR referred to the written submissions as reproduced above in support of ground no. 1 of the appeal and the additional ground filed by it.

6.1 Further, Ld. AR submitted that Ld. CIT(A) did not allow the above claim of 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 ITA Nos.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd. 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.

9.1 The said view was also confirmed by the Ld. CIT(A) on the ground that as per the scheme of section 115-O of the Act, the liability of the additional income tax by way of DDT is on the assessee’s company at the rate prescribed therein and, further, no credit can be claimed by the company or by any other person in respect of the DDTA. Further, the Ld. CIT(A) was of the view that Circular No. 14, (XL-35) dated 11th April, 1955 cited by the assessee was issued prior to coming into force of the Mitsui Kinzoku Components India Pvt. Ltd. present Income Tax Act,1961 and, in view of the fact that under the present Act the manner of claiming refund has been codified u/s 239 of the Act and, cannot go and help the assessee disregarding the statutory provisions without their being any enabling provisions in the Act or instructions issued by the CBDT.

9.2 The above 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 assessees from claiming rebate under section 87A-Whether procedural changes, such as modifications in utility software or instructions issued by tax department, cannot override substantive right to rebate under Mitsui Kinzoku Components India Pvt. Ltd. section 87A - Held, yes - Whether 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 - Held, yes - Whether thus, assessee was entitled to file revised return computing rebate under section 87A - Held, yes - Whether since last day to file a belated return in terms of section 139(4) was 31- 12-2024, CBDT was to be directed to issue requisite notification under section 119 and extend due date for e-filing of income-tax returns in relation to assessees who were required to file a return of income by 31-12-2024, at least to 15-1-2025 - Held, yes [Paras 14, 15 and 17] [In favour of assessee] 9.3 In this case also the Revenue has not contested the submissions of the assessee that the utility for filing income-tax return does not allow alteration of the rate at which dividend is to be paid and hence the assessee was barred by income-tax utility for claiming the refund in its income-tax return by paying the tax @ 10% on dividends under the India-Japan DTAA. Thus, it is seen that due to non- availability of the required utility in the e-filing portal, the assessee could not alter the rate of tax payable on dividend which according to it was payable @ 10% in terms of India- Japan DTAA. Following the above decision of the Hon’ble Bombay High Court, we are of the considered view that such a claim of the assessee cannot be rejected on the ground that the required facility was not available on the e-filing portal of the Department. Therefore, we do not agree with the stand of the AO, rejecting the claim of the assessee and also its upholding by the Ld. CIT(A). We, therefore, direct the Mitsui Kinzoku Components India Pvt. Ltd. AO to accept the claim of the assessee for issuing refund as per the application filed by the assessee u/s 237 of the Act dated 27.10.2020 treating it as a valid application, after necessary verification and also in view of our decision later in this order that the claim of the assessee is also acceptable on merits.

9.4 The Ld. CIT(A) on merits rejected the claim of the assessee relying upon the decision of the Special Bench, Mumbai in the case of DCIT vs. Total Oil India (P.) Ltd. (supra). However, the said decision has been overruled by the Hon’ble Bombay High Court 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 ITA Nos.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd. 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 benefit to detriment of other. When a treaty is entered into, it is expected to have considered its impact on trade and investment and since it is mutual arrangement, it must be given full effect to and merely because there are unilateral amendments made on domestic front, the treaty cannot be made ineffective by construing the same in light of domestic law. The Parliament, is not within its power to change the terms of a bilateral treaty, which is a a result of negotiated economic bargain between India and UK. A party may not follow the treaty, it may choose to renege from its obligations thereunder, but it cannot amend the treaty on the guise of its domestic law, having undergone change. Amendments to domestic law, cannot be read into treaty provisions, without amending Treaty itself. Since it is necessary for the contracting party to fulfill their obligations under a Treaty in good faith and this includes its accountability under it and act in a manner, not to defeat its purpose and object, we find that the benefit accruing under the DTAA, and Article 11 thereof, cannot be be denied as Revenue is of the opinion that the Treaty do not cover 'Dividend' or it is not applicable to a domestic company. 56 In Tata Tea Company (supra), while pronouncing upon the constitutional validity of Section 115-O of the Act of 1961, which is a provision for declaration, distribution or payment of dividend by domestic company and imposition of additional tax on dividend, it is held by the Apex Court that the source of the Mitsui Kinzoku Components India Pvt. Ltd. income may be agriculture, but when dividend is declared to be distributed and paid to shareholder of a company, its source is not relevant, as it remains dividend income. Nor does the fact that it is share of the company's profit, is held to be interfere with character of profit, from which it reaches hands of shareholder. 57 BFAR has based its decision on the definitional and conceptual framework of DDT holding that if it paid by the petitioner to its shareholder, it falls outside scope of DTAA as, (a) Dividend is an amount declared, distributed or paid by the Domestic Company out of the current or accumulated profits; (b) Dividend is additional income tax payable over and above the income tax chargeable in respect in total income of such company. BFAR has concluded that incidence of tax under Section 115-O is only upon domestic 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, Mitsui Kinzoku Components India Pvt. Ltd. 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 declared, distributed or paid by way of dividends" as "income" of the company distributing dividends. Moreover, the Hon'ble Supreme Court in UOI v. Tata Tea Co. Ltd. (supra), has, in no uncertain words, held that "income as defined in Section 2(24) of the 1961, Act is the inclusive definition including specifically 'dividend' and that "section 115-O pertain to declaration, distribution or payment of dividend by company and imposition of additional tax on dividend is thus clearly covered by subject as embraced by Entry 82 Once the Hon'ble Supreme Court has held that dividend connotes income, the natural corollary is that as per section 4, the said income should be chargeable to tax in the hands of the person earning such income. However, from a combined reading of Section 115-O and 10(34), alongwith the legislative history narrated earlier, it is evident that DDT is a tax on the dividend income of the shareholder, though the incidence of tax has shifted from the shareholder to the company paying the dividend. Any other interpretation of the provisions will render the section 115-O of the Act unconstitutional as it will fall foul of Entry 82, since what is sought to be taxed by the Respondent is not 'income' of the company. 58 The Board of Advanced Ruling has further failed to appreciate that in view of the statutory provisions and legislative background of Section 115-O of the Act, DDT paid by a company Mitsui Kinzoku Components India Pvt. Ltd. distributing dividend is not an income tax on profits or income of the company, but, is a tax on the dividend, which is income of the shareholder of the company. Hence, DDT is tax on the dividend income of the shareholder, which is merely, for administrative convenience, charged in the hands of, and recovered from the company distributing dividend. There is no denying that dividend income is not chargeable to tax and is exempt in the hands of the shareholders in light of the provisions of Section 10(34) of the Act, since the burden of taxation has been shifted to the company distributing the dividend, from the shareholder. While the DDT is a tax payable by the company, and not the shareholders, in pith and substance, it is a tax on dividends that is income of the shareholders. 59 We must also note that BFAR has grossly erred in rejecting the distinction and has failed to consider the binding dictum of the Apex Court in Tata 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- Mitsui Kinzoku Components India Pvt. Ltd. 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 tax on dividend income of shareholder and it would fall in Entry 82 of the Union List. Further reliance on decision by special bench in Tata Oil is also not well founded as the Apex Court in Godrej & Boyce observed that even if it assumed that the additional income tax under the aforesaid provision is on the dividend and not on the distributed profits of the dividend paying company, it would not have made any material difference to the applicability of Section 14-A. The BFAR also erred in not appreciating that as per Section 90(2) of the Income Tax, the provision of DTAA would prevail over the domestic law to the extent they are more beneficial to the assessee who is subjected to tax in India and as per Article 1 of the DTAA, it shall apply to the persons who are residents of one or both of the Contracting States. Further, Article 2 of the Treaty apply in respect of income tax and also to any identical or substantially similar taxes which are imposed after DTAA is brought into force. Since DDT is an 'Income Tax' as per the provisions of the Act, it definitely fall within ambit of Article 2 of DTAA as income tax includes surcharge and dividend and Article 2 (2) clearly ITA Nos.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd. apply to any identical or substantially similar tax in addition to or in place of tax. DDT is squarely covered under Article 11 of the DTAA. On its plain reading the payment being covered under definition of dividend under Article 11(3) which is paid by the Company, resident of India to a resident of UK and therefore, in our view, Article 11(1) is automatically triggered, consequently triggering the restriction in rate of tax under Article 11(2). 60 Thus, the BFAR erred in not appreciating that the tax under Section 115-0 is an additional tax under its sub section (4) which in turn is a part of the Income tax statute and legislation subject to section 90 read with the relevant DTAA. Therefore, levy of tax on dividend paid/distributed by the Appellant in excess of 10% would squarely be contrary to the provision of India- UK DTAA. The BFAR therefore erred in overlooking the settled legal principle that with respect to taxability of dividend income tax under India-UK DTAA, Article 11 allocates the taxing rights between the two contracting states. Para 1 thereof gives the primary right to tax dividend income to the state of residence. However, para 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, Mitsui Kinzoku Components India Pvt. Ltd. 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 is nothing in the Article which suggests that the income has to be taxed in India in the hands of the shareholders. It merely deals with the nature of income, viz. dividend, which cannot be taxed in India at a rate exceeding 10%, if other stipulated conditions are met. The nature of income is a apropos element to invoke the said Article, and not the person who is subjected to tax, in whose hands the tax is levied, is not relevant for application of Article 11, as DDT is a 'tax on dividend income of the shareholder'. The entire legislative history of Section 115-O corroborates this. More importantly, the Apex Court in the case of Tata Tea (supra) too has confirmed the nature of income being dividend income, which is subject to DDT and under Section 115-O the dividend income is sought to be taxed at a rate of 20.36%. Section 90(2) of the Act of 1961 allow the appellant to apply the lower rate under the DTAA and Article 11(2) restrict tax rate of such dividend income to 10% and there is no embargo in Article 11 of the DTAA on the Appellant to apply the lower tax rate stipulated in Article 11(2).

.- 3910, 3911,3912/Del/2024 Mitsui Kinzoku Components India Pvt. Ltd. 61 In the wake of the above, the Authority has erred in not appreciating that DDT erroneously collected in excess of 10% as provided by India-UK DTAA is erroneous and contrary to law and retention of excess tax would be contrary to Article 265 of the Constitution of India. As a result of the above, the Appeal is allowed by setting aside the Ruling dated 27/06/2024 passed by the Board For Advanced Rulings, New Delhi, by declaring that, on the facts and circumstances of the case and in law, Colorcon Asia Pvt. Ltd ("Colorcon India" or "the Applicant" or "Company") is entitled to restrict the tax rate on dividends distributed by it to Colorcon Ltd, United Kingdom (UK), at 10% under Article 11 of the India -UK Tax Treaty. Upon the said question being answered the Department is at liberty to gross up the tax rate in an appropriate manner.” (emphasis supplied by us) 9.5 The facts in the present case are similar to the facts of the aforesaid cited case. The assessee company is a Pvt. ltd. company incorporated under the Companies Act, 1956 and is a tax resident of India and is governed by India- Japan DTAA. Further, the assessee company is wholly owned subsidiary of Mitsui Mining and Smelting Company Limited, Japan which is a foreign 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 Mitsui Kinzoku Components India Pvt. Ltd. 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 115-0 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 Range, Goa (supra) has held that the said assessee company (M/s Colorcon Asia Pvt. Ltd.) a tax resident of India was entitled to restrict the tax rate on dividends distributed by it to Colorcon Ltd, United Kingdom (UK), at 10% under Article 11 of the India -UK Tax Treaty. Therefore, following the above decision of the Hon’ble Bombay High Court and the provisions of Section 90(2) of the Act, we direct the AO to charge tax rate distributed by the assessee company to Mitsui Mining and Smelting Company Limited, Japan @ 10% under Article 10 of India-Japan DTAA. Ground nos. 2 to 2.4 of the appeal are allowed. Mitsui Kinzoku Components India Pvt. Ltd.

.- 3911/Del/2024 (A.Y. 2012-13) and ITA No.- 3912/Del/2024 (A.Y. 2013- 14).

Order pronounced in the open court on 31st December, 2025.