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2021 (10) TMI 178 - HC - Income TaxRevision u/s 264 - excess Dividend Distribution Tax (DDT) paid, within a time bound period - Petitioner also seeks a declaration that Section 115-O be read in a manner that is not inconsistent with Article 10 and other provisions of the India- Mauritius DTAA - HELD THAT - This Court finds that the respondents have dismissed the petitioner s revision petition without giving any reason on merits, except stating that the petition was premature, as according to the learned Commissioner, the Revenue still had time to file an appeal against the ITAT judgment in the case of Giesecke Devrient (India) 2020 (10) TMI 750 - ITAT DELHI As apparent that the learned Commissioner has neither applied its mind to the controversy at hand nor passed a reasoned order. Accordingly, the impugned order dated 31st March, 2021 is set aside and the matter is remanded back to the respondent-PCIT, Delhi-7 for passing a reasoned order within six weeks after giving an opportunity of hearing to the petitioner. This Court clarifies that it has not expressed any opinion on merits of the controversy. All rights and contentions of the parties are left open.
Issues: Challenge to order under Section 264 of Income Tax Act for Assessment Year 2018-19, refund of excess Dividend Distribution Tax (DDT), interpretation of Section 115-O in line with India-Mauritius DTAA.
Analysis: 1. The petitioner challenged the order dated 31st March 2021 for Assessment Year 2018-19 under Section 264 of the Income Tax Act, seeking a refund of INR 71,41,29,257 for excess DDT paid and a declaration aligning Section 115-O with the India-Mauritius DTAA. The petitioner argued that the beneficial rate of 5% under the DTAA should prevail over the DDT rate of 15%, including grossing up with surcharge and cess as per Section 115-O. 2. The petitioner contended that the Respondent rejected the refund request despite a binding decision by ITAT Delhi in a similar case, Giesecke & Devrient (India) Pvt. Ltd. v. Addl CIT, which directly addressed the issue. The Respondent's refusal to follow the binding decision was criticized as a violation of judicial discipline, especially after acknowledging the applicability of the decision to the petitioner's case. 3. Citing the decision in Riso India Private Limited v. PCIT, where a similar order under Section 264 was quashed, the petitioner sought relief. The Court noted that the Respondents dismissed the revision petition without providing any substantive reasons, deeming it premature due to the possibility of the Revenue filing an appeal against the ITAT judgment in Giesecke & Devrient (India). 4. The Respondent argued that under the Dividend Distribution Tax regime of Section 115-O, the tax on distributed profits was to be borne by the Company distributing dividends, making dividends received by shareholders post DDT payment exempt under Section 10 of the Act. Referring to the Godrej & Boyce case, the Respondent asserted that the tax rate under Section 115-O prevailed over the DTAA rate, as it was more beneficial to shareholders under the Income Tax Act. 5. The Court found that the Commissioner's dismissal of the revision petition lacked reasoning and remanded the matter back for a reasoned order within six weeks, emphasizing that it had not expressed any opinion on the merits. The Court clarified that all rights and contentions were left open for further legal proceedings if the petitioner remained aggrieved by the decision of the Respondent, ensuring compliance with the law.
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