Case Law Details
Indus Towers Limited Vs DCIT (ITAT Delhi)
The case involves cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), dated 04.02.2025, arising from an assessment under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2017–18. The primary issue in the assessee’s appeal was the refusal of the CIT(A) to admit and adjudicate additional grounds of appeal raised by the assessee. These additional grounds included claims relating to allowability of education cess and higher education cess as expenditure under Section 37(1), depreciation on generator sets, deduction of expenditure on abandoned capital work-in-progress, and determination of excess dividend distribution tax (DDT) paid to non-resident shareholders.
The Tribunal noted that the assessee had relied on Supreme Court decisions to support the admission of additional grounds. It further observed that a Coordinate Bench had earlier, by order dated 30.11.2023, specifically directed the CIT(A) to adjudicate these additional claims on merits, clarifying that appellate authorities are empowered to entertain new claims even if not raised in the original return. However, despite these explicit directions, the CIT(A) again refused to admit and adjudicate the additional grounds in the impugned order. The Tribunal held that such action amounted to non-compliance with binding directions of a higher appellate authority. It characterized this as a serious lapse and reiterated that the CIT(A) was obligated to admit and decide the additional grounds in accordance with law after providing an opportunity of hearing to the assessee. Accordingly, the Tribunal restored the matter to the file of the CIT(A) with directions for fresh adjudication, and the assessee’s appeal was allowed for statistical purposes. Other grounds on merits were not adjudicated as they became academic.
In the Revenue’s appeal, the dispute related to refund of excess DDT paid by the assessee on dividends distributed to non-resident shareholders beyond the rates prescribed under applicable Double Taxation Avoidance Agreements (DTAA). The CIT(A) had allowed the assessee’s claim by relying on a decision of the Coordinate Bench, which held that DDT under Section 115-O should be restricted to the beneficial rates prescribed under the relevant tax treaty. The CIT(A) also observed that dividend income is effectively taxed in the hands of non-resident shareholders, and where treaty provisions are more beneficial, those rates should apply.
The Tribunal examined the findings of the CIT(A) and noted that the Revenue failed to controvert the reliance placed on judicial precedents or provide any contrary authority. Finding no error in the CIT(A)’s reasoning, the Tribunal upheld the decision allowing refund of excess DDT. Consequently, all grounds raised by the Revenue were dismissed.
In conclusion, the Tribunal partly allowed the assessee’s appeal for statistical purposes by directing fresh adjudication of additional grounds and dismissed the Revenue’s appeal, thereby affirming the entitlement to refund of excess DDT paid in excess of DTAA rates. The Tribunal also directed that a copy of the order be forwarded to the Chairperson of the CBDT for consideration.
FULL TEXT OF THE ORDER OF ITAT DELHI
These are cross appeals filed by the Assessee and the Revenue against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A) in short], dated 04.02.2025 arising out of the assessment order passed u/s 143(3) of the Income Tax Act, 1961 (the Act, in short) dated 29.12.2019.
2. First we take assessee’s appeal in ITA No. 2707/De1/2025 for AY 2017-18.
3. Heard both the parties at length and perused the material available on record. From the perusal of the assessment order, it is observed that before Ld. CIT(A), assessee has taken additional grounds of appeal vide letter filed before Ld. CIT(A) wherein assessee placed reliance on the judgment of the Hon’ble Supreme Court in the case of Jute Corporation of India vs. CIT reported in 187 ITR 688 (SC) and further in the case of NTPC vs. CIT 229 ITR 383 (SC). It is observed that Ld. CIT(A) had not admit the additional grounds of appeal taken by the assessee by stating that the assessee has failed to submit the reasons as to why the same were not taken earlier at the time of filing of appeal. The assessee vide additional grounds of appeal raised following issues:
(i) allowability of education Cess and higher education Cess (“Cess”) on Corporate tax as well as dividend distribution tax (DDT) as expenditure u/s 37(1) of the Act.
(ii) allowability of depreciation @ 80% on generator sets.
(iii) allowability of expenditure on abandoned working progress written off of tower sites u/s 37(1) of the Act.
(iv) allowability of determination of excess dividend distribution tax (DDT) paid to non-resident shareholder(s).
4. It is observed that the Co-ordinate Bench in terms of its order dated 30.11.2023 in ITA No.1051/De1/2023 vide para No.13 of the order has given specific directions to Ld. CIT(A) to adjudicate the additional grounds of appeal taken by the assessee and further directed to decide the issue in accordance with law. The directions given by the Co-ordinate Bench on para 13 of its order are reproduced as under:
“13. During the course of First Appellate proceedings, the assessee made certain additional claims by seeking deduction of Rs.1,58,25,191/- towards capital work-in-progress written off and refund of excess Dividend Distribution Tax paid on dividend to non-resident shareholders applying tax rates provided under respective DTAA for dividend. These issues were not even adjudicated by the ld. CIT(A) by applying the decision of Hon’ble Supreme Court in the case of Goetze India Ltd reported in 284 ITR 323 (SC). This action of the ld. CIT(A) is grossly illegal in view of the decision of Hon’ble Apex Court in the case of Goetze India Ltd itself wherein it was very clearly mentioned in the said decision that the decision was restricted to the power of the Assessing Authority to entertain a claim for deduction otherwise than by a revised return and the same did not impinge on the power of the Appellate Authority to permit a new claim. Hence, we hold that the ld. CIT(A) ought to have adjudicated these additional claims made by the assessee before him on merits. Since, the same was not done by him, we deem it appropriate to restore the grounds raised by the assessee in ground nos. 3 to 5 to the file of the ld CIT(A) for de novo adjudication therein in accordance with law. Accordingly, the ground nos. 3 to 5 raised by the assessee are allowed for statistical purpose.”
5. However, vide impugned order dated 04.02.2025, Ld. CIT(A) has completely ignored or in other words has deliberately flouted the directions given by the Coordinate Bench of Tribunal and again dismissed the appeal of the assessee by not admitting and adjudicating the additional grounds of appeal taken by the assessee. This is perfect example of serious misconduct on the part of the lower appellate forum in making compliance of the specific directions given by the higher appellate forum and CBDT should take serious note of it. In view of the facts, we once again direct the Ld. CIT(A) to admit the additional grounds of appeal and decide them in accordance with law after providing an opportunity of hearing to the assessee. Accordingly, the grounds of appeal No.1 to 1.2 raised by the assessee are allowed for statistical purposes.
6. Since we have allowed assessee’s grounds of appeal No. 1 to1.2 and direct the CIT(A) to decide the additional grounds of appeal, the other grounds taken on the merits of the additions become academic and not adjudicated.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
8. Now coming to the Revenue’s appeal in ITA No.2888/De1/2025.
9. All the issues are with respect to the charging of the excess dividend distribution tax paid on dividend to non-resident share holder over and above the rate prescribed under respective DTAA.
10. Heard both the parties and perused the materials available on record. From the perusal of the order of the Ld. CIT(A) in para 5.3 of the order, it is observed that the Ld. CIT(A) has allowed the same by following the order of the Co-ordinate Bench in the case of Giesecke & Devrient (India) Pvt Ltd, [2020] 120 com 338 (Delhi – Trib.). The relevant observations as contained in para 5.3 of the CIT(A)’s order are as under:
“5.3 The second issue raised by the appellant company through ground no 5 is regarding refund of excess dividend distribution tax (DDT) paid on the dividend distributed/paid to non-resident shareholder(s) over and above the rate specified under the respective Double Taxation Avoidance Agreements.
Having perused the facts of the case and the submission of the appellant company in the light of the issue, I find that the DDT paid by the company is an established fact. Therefore, the additional ground regarding claim of refund of excess DDT paid, raised by appellant company before the appellate authority is admissible. The decision of jurisdictional ITAT, Delhi in case of Giesecke & Devrient(India) Pvt. Ltd, has ruled that the DDT paid section 115-0 of the Act on dividend paid to non-resident share holders ought to be restricted to the rates prescribed under the relevant tax treaty. Various other Judicial pronouncements on the issue have also established that the dividend being income in the hands of non-resident shareholders in respect of which incidence of tax is borne by the resident company paying dividend, rate of tax as specified in DTAA being more beneficial to assessee would be applicable over rate specified in section 115-0. in view of the above, I hereby direct the AO to allow refund of the excess DDT paid by the appellant company, in accordance with the law. Hence ground no. 5 is allowed.”
11. Before us, the Revenue has failed the controvert the findings of the Ld. CIT(A), who allowed the ground of the assessee by placing reliance on the judgment of coordinate bench of Tribunal nor any contrary judgement was placed before us, therefore, we find no error in the order of the Ld. CIT(A) and, accordingly, all the grounds of appeal of Revenue are dismissed.
12. In the final result, the appeal of the assessee is partly allowed for statistical purposes and appeal of the Revenue is dismissed.
13. The registry is directed to forward a copy of this order to the Hon’ble Chairperson, CBDT for his kind consideration.
Order pronounced in the open Court on 24.04.2026.
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