DDT is tax on shareholders' dividend income collected from company; DTAA lower rates cap DDT liability under section 90(2), enabling refund of excess to paying company.

आदेश/ORDER 

PER GEORGE GEORGE K, VICE PRESIDENT:

These appeals filed by the assessee are directed against two orders of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, both dated 23.06.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2016-17 & 2019-20.

2. There is a delay of 117 days in filing the appeals. The assessee has filed affidavits seeking condonation of delay stating therein the reasons for belated filing of appeals. It was submitted that the issues involved in the appeal pertain to non-resident parties and international tax implications, which necessitated detailed internal deliberations and obtaining approvals from multiple stakeholders, including foreign entities. The said process, being time-consuming, resulted in the delay in filing the appeal. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of these appeals. Hence, we condone the delay and proceed to dispose off the appeals on merits.

3. Common issues are raised in these appeals. Hence, they are heard together and are being disposed of by this common order. Identical grounds are raised in these appeals and they read as follows:-

1. Ground No. 1-General

The Order passed by the Commissioner of Income Tax(Appeals) (Ld. CIT(A)) under section 250 of the Income-tax Act. 1961 (the Act) is unsustainable and bad in law

The denial of refund and rejection of claim of refund under section 237 of the Act by the CIT(A) is contrary to the law, facts and circumstances of the case and hence liable to be quashed

The detailed grounds of appeal, including the position in law and facts is set out in the ensuing paragraphs

2. Ground No.2 Dividend Distribution Tax paid by the Company is a tax on shareholders income.

The Ld. CIT(A) has erred in facts and law, by considering that Dividend Distribution Tax (DDT) is a liability of the Indian resident company and not that of the shareholder of the Company

Levy of tax on dividend distributed deeming it to be income of the Company would lead to double taxation as dividend is paid out of profits which are already taxed at applicable tax rates

The Ld. CIT(A) has failed to appreciate the legislative history of taxation of dividend and various judicial precedents relied in our submissions, basis which it could be inferred that DDT paid by the Company is nothing but tax on shareholders income.

3. Ground No.3 DDT paid is a tax on dividend income of shareholders. Consequently, the provisions of Double Taxation Avoidance Agreement ('DTAA') shall be applicable and hence, tax liability needs to be determined post factoring the provisions of the Act and relevant Article of DTAAS, whichever is more beneficial.

The Ld. CIT(A) has erred in facts and law by failing to appreciate that DDT paid is a tax on dividend income of shareholders and the tax liability needs to be determined post factoring the provisions of the Act and relevant Article of DTAAS, whichever is more beneficial

4. Ground No. 4-Amendments in dividend taxations provisions in the Act shall not affect the provisions of DTAA.

The CIT(A) has erred in facts and law by not considering the provisions of treaty for determining taxability of dividends in the case of Non-residents

The CIT(A) has failed to appreciate the fact that subsequent amendments to domestic law shall not contradict international treaty obligations

5. Ground No.5- Section 115-0 of the Act does not override the provisions of Tax Treaty entered into by the central government with a country, under section 90 of th