JOHN DEERE INDIA PRIVATE LIMITED,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX, PUNE

Facts of the case in brief that the assessee is engaged in manufacturing of tractors, agricultural equipments and spare parts. Also it has technology centre which is primarily involved into catering of information technology and engineering services to Deer Associates. It filed its return of income on 29.11.2016 declaring total income of Rs.775,75,65,910/- . The Assessing Officer completed the assessment u/s. 143(3) r.w.s.144C(3) of the Income Tax Act, 1961, determining the taxable income of the assessee at Rs.779,48,85,800/- wherein he made an addition of Rs.3,73,19,882/- by making disallowance u/s. 14A of the Act.

Before the CIT(A) the assessee through an additional ground challenged the order of the Assessing Officer in not granting the credit of the excess Dividend Distribution Tax of Rs.2,88,31,272/- paid by the assessee. It was submitted that in respect of the dividend declared by it, the dividend distribution tax has been paid @ 20.36% as against the rate of 10% provided in the DTAA between India and Singapore and therefore the said rate as per the DTAA should be applied for the payment of dividend distribution tax and the excess tax should be refunded.

However, the ld.CIT(A) did not accept the contention of the assessee and rejected the same by the relying on the decision of the Special Bench of the Tribunal in the case of Total Oil India Pvt. Ltd. & Oth Vs DCIT vide dt.20.04.2023. The relevant para of the CIT(A)’s order reads as under : “8.3 I have carefully considered the facts of the case and submission filed by the appellant. The issue is regarding claim of refund of excess dividend distribution tax paid by the appellant u/s 115-O on repatriation of dividend income to its holding company viz. John Deere Asia (Singapore) Private Limited. Briefly, the appellant company distributed dividend of Rs.27,83,57,353 to JD Singapore during AY 2016-17. The appellant company deducted TDS on this as per section 115-O of the Act amounting to Rs.5,66,67,007. The appellant has claimed that instead of Tax deducted @ 20.36% (grossed up), the TDS should have been restricted @10% as per Article 10(2) of India-Singapore Double Taxation Avoidance Agreement („the DTAA‟ or „the tax treaty‟) read with section 90(2) of the Act. The appellant has referred to section 90 of the Income Tax Act and stated that it overrides provision of section 115-O. It is seen that section 90 is under Chapter IX of the Income Tax Act which is on double taxation relief. This primarily deals with non-resident assesses and section 90(2) states the principle for granting relief of tax for non-resident assesses for avoidance of double taxation. It is not furnished how the dividends have been taxed in both India and Singapore for the non-resident parent entity. In the instant case, the appellant is as resident and not a non-resident and the discussion under section 90 is not appropriate.”

Aggrieved with such order of the CIT(A) the assessee filed an appeal before the Tribunal.

Both the sides fairly conceded that the issue stands decided against the assessee by the decision of the Special bench of the Tribunal in the case of Total Oil India Pvt. Ltd. & Oth Vs DCIT supra, which has been followed on by the ld. CIT(A). Since the ld. CIT(A) while deciding the issue against the assessee followed the decision of Special bench of the Tribunal cited (supra) therefore, in absence of any contrary material brought to our notice, the order of the CIT(A) is upheld and the grounds raised by the assesse are dismissed.

In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open Court on 22nd July, 2024.