2024 (9) TMI 1108 - AT - Income Tax

Claim of refund of excess DDT paid - on dividend declared by assessee, the dividend distribution tax has been paid @ 20.36% as against the rate of 10% provided in the DTAA between India and Singapore - CIT(A) did not accept the contention of the assessee and rejected - HELD THAT - Both the sides fairly conceded that the issue stands decided against the assessee by the decision of Total Oil India Pvt. Ltd. Oth 2023 (4) TMI 988 - ITAT MUMBAI (SB) 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 assessee are dismissed.

Summary

Issues:
1. Claim of refund of excess Dividend Distribution Tax (DDT) paid.
2. Applicability of Double Taxation Avoidance Agreement (DTAA) between India and Singapore on DDT rate.

Issue 1: Claim of refund of excess Dividend Distribution Tax (DDT) paid

The assessee, engaged in manufacturing and technology services, filed an appeal against the CIT(A)'s order rejecting the claim of refund of excess DDT paid. The Assessing Officer had added an amount under section 14A during assessment, leading to a dispute over the excess DDT paid by the assessee. The assessee contended that the DDT rate of 20.36% was higher than the 10% rate provided in the DTAA between India and Singapore, seeking a refund of the excess tax paid. However, the CIT(A) upheld the Assessing Officer's decision, citing a Special Bench Tribunal judgment involving similar issues with Total Oil India Pvt. Ltd. The CIT(A) emphasized that the provisions of section 90 of the Income Tax Act, dealing with double taxation relief for non-resident assesses, were not applicable to the present case as the appellant was a resident entity. Consequently, the appeal challenging the denial of refund was dismissed by the Tribunal, upholding the CIT(A)'s decision.

Issue 2: Applicability of Double Taxation Avoidance Agreement (DTAA) between India and Singapore on DDT rate

The primary contention of the assessee was the application of the DTAA between India and Singapore on the DDT rate paid. The assessee argued that the DDT rate should align with the 10% rate specified in the DTAA instead of the 20.36% rate paid. However, both the CIT(A) and the Tribunal relied on the Special Bench Tribunal's decision in the Total Oil India Pvt. Ltd. case to reject the assessee's claim. The Tribunal noted that the CIT(A) had correctly followed the precedent set by the Special Bench Tribunal, and since no new material was presented to challenge this decision, the appeal was dismissed. The Tribunal upheld the CIT(A)'s order, emphasizing the inapplicability of section 90 of the Income Tax Act concerning double taxation relief for non-resident assesses to the assessee's case as a resident entity.

In conclusion, the Tribunal upheld the CIT(A)'s decision to dismiss the appeal filed by the assessee regarding the refund of excess DDT paid, based on the provisions of the DTAA between India and Singapore and the precedent set by the Special Bench Tribunal.