2024 (3) TMI 1257 - AT - Income Tax

Refund of excess dividend Distribution Tax (DDT) paid - rate of dividend distribution tax in relation to the dividend paid to its parent company should be circumscribed to 5% against the rate of 20.359% provided for u/s 115-O since the same was covered by the DTAA between Netherland India - HELD THAT - Since, in the case of the assessee contracting states has not extended treaty protection to domestic company paying dividend distribution tax therefore, after following the decision of Total Oil (P) Ltd 2023 (4) TMI 988 - ITAT MUMBAI (SB) dividend distribution tax would be payable at the rate mentioned in Sec. 115-O of the Act and not at the rate of tax applicable to non-resident shareholders as specified. Therefore, this ground of appeal of the assessee is dismissed. Short grant of credit of Tax Deducted at Source (TDS) - in the order passed u/s 143(3) AO has granted TDS credit less than TDS claimed made by the assessee - HELD THAT - After hearing both the sides and perusal of the material on record, we restore this issue to the file of the assessing officer for deciding afresh after verification of the detail filed by the assessee. Therefore, this ground of appeal is allowed for statistical purposes.

Summary

Issues involved:
The judgment involves issues related to the reasonable opportunity of being heard, refund of excess Dividend Distribution Tax (DDT), and short grant of credit of Tax Deducted at Source (TDS).

Issue 1: Reasonable Opportunity of Being Heard:
The appellant contended that they were not provided with a sufficient and reasonable opportunity of being heard, violating the principles of natural justice. However, the counsel did not press this ground, leading to its dismissal.

Issue 2: Refund of Excess Dividend Distribution Tax (DDT):
The appellant argued for a refund of excess DDT paid, citing the DTAA between India and Netherlands. The ITAT Mumbai special bench precedent clarified that DDT paid by a domestic company does not fall under the DTAA unless specifically provided. As the contracting states did not extend treaty protection, the DDT was held payable at the rate under Section 115-O of the Act. Consequently, the ground of appeal for refund of excess DDT was dismissed.

Issue 3: Short Grant of Credit of TDS:
The appellant claimed credit for TDS of a certain amount, but the assessing officer granted a lower credit. The matter was restored to the assessing officer for reevaluation based on the details provided by the appellant. Therefore, this ground of appeal was allowed for statistical purposes.

In conclusion, the judgment addressed the issues of reasonable opportunity of being heard, refund of excess DDT, and short grant of TDS credit. The decision was made based on legal interpretations and precedents, leading to the dismissal of the refund claim and the allowance of the TDS credit issue for further assessment.