2024 (2) TMI 1225 - AT - Income Tax

Deduction u/s 80-IA - contracts entered with non- government entities - admission of additional evidences submitted by the assessee - HELD THAT - As we have admitted the additional evidences, without going into the merits of the additional evidences, we restore the issue before the learned CIT (A) to examine these evidences and decide the issue of allowability of claim of deduction u/s 80IA of the Act with respect to the additional evidences. This is also so for the reason that the disallowance is confirmed for one of the reasons being non-production of the contracts. Disallowance u/s 36(1)(va) - delay in depositing employee s contribution beyond the due dates prescribed under the respective Act - HELD THAT - This ground is already decided by the learned CIT (A) against the assessee relying on the decision of the Hon'ble Supreme Court in CHECKMATE SERVICES P. LTD. 2022 (10) TMI 617 - SUPREME COURT . In absence of any argument by the learned Authorized Representative, same is dismissed. Levy of Dividend distribution tax (DDT) at the rate of 20.36% u/s 115O - claim of assessee that it should have been levied at the rate of 15% in terms of Article 10 of DTAA between India and Thailand - HELD THAT - As AR fairly admitted that this issue is decided against the assessee by the Special Bench in case of Total Oil Limited 2023 (4) TMI 988 - ITAT MUMBAI (SB) where it is held that dividend distribution tax is an additional tax charged on the distributed profits of the company and not on the shareholder. The learned Departmental Representative also agreed with the same. As decision of Total oil Limited SB has held that shareholders have nothing to do with the levy of DDT on distributed profits of the company. List of shareholders, their beneficial interest in the dividend and residential status of the shareholder as per DTAA are not produced before us. It has also not been established before us that even otherwise the claim is in time or not and further whether the sources country India has to cede its right of taxation or not. Therefore, all these issues remain unexamined at all stages.

Summary

Issues Involved:
1. Disallowance of deduction under Section 80-IA of the Income-tax Act.
2. Disallowance under Section 36(1)(va) of the Income-tax Act.
3. Levy of dividend distribution tax under Section 115-O of the Income-tax Act.

Summary:

Issue 1: Disallowance of Deduction under Section 80-IA
The assessee, engaged in civil construction, claimed a deduction under Section 80-IA amounting to Rs. 28,982 lakhs for 16 projects. The Assessing Officer disallowed the deduction, stating the assessee was a mere contractor, not satisfying the conditions under Section 80-IA(4). The CIT(A) partly upheld the disallowance, confirming Rs. 278,35,71,856 and allowing Rs. 11,47,19,144. The Tribunal admitted additional evidence submitted by the assessee, which was not produced earlier due to logistical issues and ongoing reassessment proceedings. The Tribunal remanded the matter back to the CIT(A) for reconsideration of the additional evidence and determination of the allowability of the deduction under Section 80-IA.

Issue 2: Disallowance under Section 36(1)(va)
The CIT(A) upheld the disallowance of Rs. 1,97,740 under Section 36(1)(va) for delayed deposit of employees' contributions, relying on the Supreme Court decision in Checkmate Services (P.) Ltd. vs. CIT. The Tribunal dismissed this ground in the absence of any argument from the assessee.

Issue 3: Levy of Dividend Distribution Tax
The assessee contested the levy of dividend distribution tax at 20.36%, arguing it should be 15% under Article 10 of the DTAA between India and Thailand. The CIT(A) rejected this claim, and the Tribunal upheld the decision, referencing the Special Bench ruling in Total Oil Limited, which held that dividend distribution tax is on the company, not the shareholders. The Tribunal noted the absence of evidence regarding the shareholders' details and the claim's timeliness, leading to the dismissal of this ground.

Conclusion:
The appeal was partly allowed for statistical purposes, with the matter concerning the deduction under Section 80-IA remanded back to the CIT(A) for further examination. The disallowance under Section 36(1)(va) and the issue of dividend distribution tax were dismissed.