Mitsui Kinzoku Components India Pvt. Ltd. Vs CIT(A) (ITAT Delhi)
Dividend Tax Means Shareholder Tax: Excess DDT to Be Refunded
In Mitsui Kinzoku Components India Pvt. Ltd. Vs. CIT(A) , ITA Nos.3910, 3911 & 3912/Del/2024, AYs 2011-12, 2012-13 & 2013-14, order dated 31.12.2025, Delhi ITAT allowed Assessee’s appeals & directed refund of excess Dividend Distribution Tax (DDT) paid.
Assessee, an Indian subsidiary of Mitsui Mining & Smelting Co. Ltd., Japan, had distributed dividends to its Japanese parent & paid DDT @16.61% u/s 115-O. As per Article 10 of India–Japan DTAA, tax on dividends payable to a Japanese resident could not exceed 10%. Assessee filed application u/s 237 seeking refund of excess DDT, contending that e-filing utility did not permit claiming DTAA rate, hence refund could not be claimed in return. AO rejected claim citing section 239, & CIT(A) upheld rejection relying on ITAT Special Bench in Total Oil India.
Tribunal admitted additional legal grounds & held that procedural limitations of ITR utility cannot defeat substantive right to refund u/s 237, placing reliance on Bombay HC in Chamber of Tax Consultants. On merits, Tribunal noted that Special Bench decision in Total Oil India stood overruled by Bombay HC in Colorcon Asia Pvt. Ltd., which held that DDT is tax on dividend income of shareholder, & DTAA benefit applies by virtue of section 90(2). Following Colorcon Asia, ITAT ruled that Assessee was entitled to restrict DDT rate to 10% under India–Japan DTAA & directed AO to grant refund of excess DDT after verification. Appeals for all three years were allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
