DDT on Dividend to Japan Parent Capped at 10% Under DTAA | ITAT

Case Details: Mitsui Kinzoku Components India (P.) Ltd. vs. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [2026] 183 taxmann.com 659 (Delhi-Trib.)

Judiciary and Counsel Details

• Vikas Awasthy, Judicial Member & Brajesh Kumar Singh, Accountant Member
• Ajit Jain, CA & Siddesh Chaudale, Adv. for the Appellant.
• Vikram Singh Sharma, Sr.DR for the Respondent.

Facts of the Case

The assessee, an Indian company wholly owned by a Japanese company, distributed dividends to its parent (a tax resident of Japan) and paid DDT at 16.61% under section 115-O. Subsequently, the assessee filed an application under section 237 seeking refunds of the excess DDT, claiming that the 10% tax rate on dividends under Article 10 of the India-Japan DTAA applied.

The Assessing Officer (AO) rejected the claim on the ground that no such claim had been made in the original or a revised return as mandated under section 239. On appeal, the CIT(A) also rejected the assessee’s claim. The aggrieved assessee filed the instant appeal before the Tribunal. The Tribunal held that the assessee had paid DDT at a rate of 16.61% on dividends paid to its shareholders. However, the 10% tax rate applies to dividends distributed to its parent under Article 10 of the India-Japan DTAA. The assessee submitted an application to the AO requesting him to issue an order under section 237 determining the refund of excess DDT paid. The AO perused the assessee’s claim along with the return of income filed. It emerged that, on perusal of the return of income, the assessee did not claim a refund for the excess DDT payment.

The AO further noted that it had been exclusively mentioned in section 239 that ”every claim for refund under this Chapter (Chapter XIX) shall be made by furnishing a return in accordance with the provisions of section 139. In the instant case, the AO observed that neither the assessee claimed the refund in its original return of income nor filed any revised return. The AO, considering the statutory provisions of the Income Tax Act, 1961, held that the refund of the amount claimed by the assessee for the relevant assessment year was not justified, as it was not claimed at the time of filing the return of income, and rejected the claim. The CIT(A) also confirmed the additions made by the AO. Aggrieved by the order, the assessee filed this appeal before the Tribunal.

ITAT Held

The Mumbai Tribunal held that the assessee had filed a claim under section 237 and also filed its return of income by the due date. However, the assessee submitted that the said claim could not be made in the return of income due to the absence of any utility in claiming a refund under section 115-O. In a similar case, the Bombay High Court held that the tax authorities must act as facilitators to help taxpayers comply with the law, rather than create impediments through technical or procedural hurdles. In this case also, the AO did not contest the assessee’s submissions that the utility for filing an income-tax return does not allow alteration of the rate at which the dividend is to be paid.

Thus, it was observed that, due to the unavailability of the required utility on the e-filing portal, the assessee could not modify the rate of tax payable on the dividend, which, according to it, was payable at 10% under the India-Japan DTAA. Therefore, the assessee’s claim was to be accepted for the issuance of a refund, as per the application filed under section 237, after necessary verification.

List of Cases Reviewed

• Chamber of Tax Consultants v. DIT (System) [2024] 169 taxmann.com 506/[2025] 302 Taxman 505 (Bombay) (para 9.3)
• Colorcon Asia (P.) Ltd. v. Jt. CIT [2025] 181 taxmann.com 301 (Bombay) (para 9.6) followed
• Dy. CIT v. Total Oil India (P.) Ltd. [2023] 149 taxmann.com 332 (Mumbai – Trib.)/ITA No. 6997/MUM/2019 (para 9.4) distinguished

List of Cases Referred to

• Union of India v. Tata Tea Co. Ltd. [2017] 85 taxmann.com 346/251 Taxman 10/398 ITR 260 (SC) (para 2.1)
• Giesecke & Devrient (India) (P.) Ltd. v. Addl. CIT [2020] 120 taxmann.com 338 (Delhi – Trib.) (para 2.1)
• Dy. CIT v. Total Oil India (P.) Ltd. [2023] 149 taxmann.com 332/(Mumbai – Trib.) (para 4.1)
• National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383/97 Taxman 358 (SC) (para 5.2)
• Colorcon Asia (P.) Ltd. v. Jt. CIT [2025] 181 taxmann.com 301 (Bombay) (para 6.1)
• Chamber of Tax Consultants v. DIT (System) [2024] 169 taxmann.com 506/[2025] 302 Taxman 505 (Bombay) (para 9.2).