INDIAN OIL PETRONAS PVT LTD. ,KOLKATA V. DCIT,CIR-11(1), KOLKATA. , KOLKATA

ITA 589/KOL/2024

AI Insights

Indian Oil Petronas Pvt. Ltd. appealed against the orders of the Commissioner of Income-tax (Appeals), Kolkata, which denied the refund of Dividend Distribution Tax (DDT) claimed by the company for the assessment years 2017-18 and 2018-19. The company argued that under the DTAA between India and Malaysia, the DDT should not exceed 5%, whereas it was charged at 20.3576% as per section 115-O of the Income Tax Act. The Tribunal, referencing a Special Bench decision, held that DDT is levied on the company and not the shareholders, and thus the DTAA does not apply to reduce the DDT rate.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712881 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2017-2018
• Other Referred Cases: Giesecke & Devrient (India) Pvt. Ltd. vs. DCIT, DCIT vs. Total Oil India Pvt. Ltd.
• Laws Referred To: Income Tax Act, Double Taxation Avoidance Agreement (DTAA)
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR PATI
• Assessee Lawyers: S N.S. SAINI; SONU AGARWAL; ARS
• Keywords: Double taxation relief

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA Nos.589 & 590/KOL/2024 (Assessment Years:2017-18 & 2018-19) Indian Oil Petronas Pvt. Ltd. Acropolis Mall, 12th Floor, Unit-1 & II, 1858/1, Rajdanga Main Road, Kolkata-700107, West Bengal Vs. DCIT, Circle 11(1), Kolkata Aaykar Bhavan, 6 th Floor, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AAACI5573R Assessee by : S/Shri N.S. Saini, & Sonu Agarwal, ARs Revenue by : Shri Manoj Kumar Pati, DR Date of hearing: 17.07.2025 Date of pronouncement: 29.07.2025 O R D E R Per Rajesh Kumar, AM: These are appeals preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals), Kolkata-22, (hereinafter referred to as the “Ld. CIT(A)”]even dated 31.01.2024 for the AYs2017-18 & 2018-19. 02. The issue involved in both these appeals same as under: - “Whether, on a true and harmonious construction of the provisions of the Act, the tax liability of a domestic company, like the appellant, on the dividend distributed to its. non-resident shareholders shall be at the rate as applicable in the respective DTAA as the same is more beneficial to the appellant comparing the rates prevailing under the provisions of section 115-0 of the Act?” Printed from counselvise.com Page | 2 ITA Nos. 589 & 590/KOL/2024 Indian Oil Petronas Pvt. ltd.; A.Ys. 2017-18 & 2018-19 03. The facts in brief are that the assessee is engaged in the business of processing and blending of LPG gas. The assessee manufactured blended LPG out of Butane and Propane. The assessee was formed through a Joint Venture Agreement between Indian Oil Corporation, a Public Sector Undertaking of the Government of India and Petroliam Nasional Berhad (Petronas), a government Undertaking of Malaysia. During the impugned assessment year, the assessee company paid a dividend of ₹80,40,00,000/- to its shareholder including a dividend paid to Petroleum Nasional Berhad a tax resident company of Malysia of ₹40,20,00,000/- and paid dividend distribution tax (in short DDT) @20.3576% amounting to ₹16.36,75,482/- u/s 115O of the Act. the assessee during the assessment proceedings submitted before the ld. AO that as per DTAA between government of India and Government of Malysia tax payable on DDT cannot exceed 5% by relying on the decision of the co-ordinate bench in case of Giesecke &Devrient (India) Pvt. Ltd. (2020) 20 ITR (Trib)-OL 654 (ITAT Delhi). During this impugned assessment year, the assessee claimed the refund of DDT paid of ₹6,17,37,745/- in A.Y. 2017-18 and ₹4,11,58,495/- for A.Y. 2018-19. However, the ld. AO did not accept the same and no finding was given to the assessee’s claim. 04. Aggrieved assessee preferred the appeal before the ld. CIT (A). However, the ld. CIT (A) dismissed the appeal of the assessee by following decision of the Special bench Mumbai Tribunal in case of DCIT Vs. Total Oil India Pvt. Ltd. in (2023) 104 ITR (Trib) 1 [ITAT (Mum)(SB)]. 05. After hearing the rival contentions and perusing the materials available on record, we find that in the order of the ld. CIT (A), we note that the ld. CIT (A) has followed the Special bench decision of Printed from counselvise.com Page | 3 ITA Nos. 589 & 590/KOL/2024 Indian Oil Petronas Pvt. ltd.; A.Ys. 2017-18 & 2018-19 Mumbai Tribunal in the case of DCIT Vs. Total Oil India Pvt. Ltd (supra), wherein it has been held that the dividend distribution tax is a tax on the income of the company and not on the shareholder and therefore, there is no double taxation of the same. It was also held by the Special Bench that the domestic company u/s 115O does not enter the domain of Double Taxation Avoidance Agreement (DTAA)at all and the DTAA does not get attracted at all when a domestic company pays DTT under section 115-O of the Act. We do not find any infirmity in the order of the ld. CIT (A) and therefore, on this issue, we are inclined to uphold the order of the ld. CIT (A) by dismissing the appeal of the assessee. 06. In the result, both the appeals of the assessee are dismissed. Order pronounced in the open court on 29.07.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 29.07.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "