DCIT Vs Export Import Bank of India (ITAT Mumbai)
In this case involving Export-Import Bank of India, the issue was whether amounts transferred to the Central Government could be treated as dividend liable to Dividend Distribution Tax (DDT) under section 115-O.
The AO treated such transfer (₹31.58 crore) as dividend under section 2(22) and denied refund. However, the CIT(A) deleted the addition, relying on earlier Tribunal rulings in the assessee’s own case and in LIC.
The ITAT upheld the CIT(A)’s order and held:
- The transfer to the Central Government was not a distribution of dividend, but a mandatory transfer under the Exim Bank Act
- For a payment to qualify as “dividend”, there must be:
- Share capital, and
- Shareholders receiving proportionate distribution
- In this case, no shareholding structure existed-the Government’s position was akin to a sole proprietor, not a shareholder
- Hence, basic conditions of “dividend” under section 2(22) failed
Accordingly:
- Section 115-O (DDT) was held inapplicable
- Addition of ₹3.63 crore was deleted
- Refund claim under section 237 was upheld
The ruling reinforces a key principle-without shareholders and share capital, a payment cannot be treated as dividend, even if made to the Government.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The Revenue has filed the present appeals against the separate impugned orders of even date 03.10.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”), by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], which in turn arose from the separate order passed under section 237 of the Act, for the assessment years 1999-00 to 2001-02 and 2003-04 to 2006-07.
