Can I simply cite Colorcon Asia and get the treaty rate on my DDT, or will the Tribunal want more?
It will want more. The Kolkata Tribunal admitted the additional ground but declined to decide it, restoring the issue to the Assessing Officer for re-adjudication. It held that although the ground is a legal one it requires verification of facts, and it identified three things that had to be established on the Kolkata Bench's own earlier decision in Indian Oil Petronas — that the dividend constitutes income in the hands of the non-resident shareholder, that the shareholder is the beneficial owner, and that the shareholder has no permanent establishment in India — and two things not considered in Colorcon Asia, namely the protocol to the treaty and the effect of the Supreme Court's decision in Nestle SA.
Decided by the ITAT (Shri George Mathan, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member (ITAT 'C' Bench, Kolkata)) on 2026-06-08, reported as C.O. No. 125/Kol/2017, assessment year 2010-11; heard 1 April 2026, pronounced 8 June 2026. It bears on section 115-O, section 90, section 10(34) of the Income Tax Act 1961, in How Tax Law Is Read and Appeals matters.
This is the most useful decision in the line for a practitioner, because it tells you what your file must contain rather than what the law is. Bata had paid DDT suo motu at 16.995 per cent and argued for ten per cent under Article 10 of the India-Netherlands treaty, and the Tribunal put a series of questions that no one had answered: had the tax been collected by the Assessing Officer or paid voluntarily (it was voluntary); had the DDT been reduced from the dividend paid out (it had not — the dividend was paid in full); and how, on those facts, a question of law arose at all. The protocol point is the one that will decide many of these cases. The Departmental Representative relied on CBDT Circular No. 3/2022 dated 3 February 2022 and on the Supreme Court's decision in the Nestle SA matter (Civil Appeal No. 1420 of 2023, order dated 19 September 2023). The assessee's answer was that the circular concerned protocols, that the Supreme Court in Nestle SA had negated attempts to claim, by force of a protocol, a rate even lower than the treaty rate, and that Nestle SA did not dislodge Colorcon Asia. The Tribunal did not choose between them; it held that the point had to be examined, expressly recording that before the Bombay High Court in Colorcon Asia the protocol issue was not considered, nor the impact of Nestle SA, possibly because what was argued there was ten per cent and not a lower five per cent. Anyone whose claim depends on a protocol or a most-favoured-nation clause must therefore treat Colorcon Asia as not covering the point. Note also the Tribunal's reference to paragraph 8.13 of the Kolkata Bench's decision in DCIT v. Indian Oil Petronas (P) Ltd., which it read as making the treaty rate conditional on those three findings of fact. That is the checklist to build the file around.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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On a cross-objection for assessment year 2010-11 the assessee raised an additional ground that dividend distribution tax was payable at ten per cent under Article 10 of the India-Netherlands double taxation avoidance agreement rather than at 16.995 per cent under s.115-O, and sought a direction to the Assessing Officer to refund the excess. On the Tribunal's questions it emerged that the tax had been paid suo motu by the assessee at 16.995 per cent, that the assessee had recognised the claim only in 2017, that the dividend had been paid in its entirety and the DDT had not been reduced from the dividend pay-out, and that the claim was said to have arisen from the Supreme Court's decision in Union of India v. Tata Tea Co. Pvt. Ltd., 398 ITR 260. The assessee relied on the Mumbai Special Bench decision in DCIT v. Total Oil India Pvt. Ltd. in ITA No. 6887/Mum/2019 as the origin of the controversy, on the Bombay High Court in Colorcon Asia Pvt. Ltd., on the Delhi Tribunal in Mitsui Kinzoku Components India Pvt. Ltd. (ITA Nos. 3910, 3911 and 3912/Del/2024) and on the Kolkata Bench in DCIT v. Indian Oil Petronas (P) Ltd., 127 taxmann.com 389. The Departmental Representative said the issue had not been before the Assessing Officer or the Commissioner (Appeals), that the treaty needed to be examined, that he had no objection to a restoration, and relied on CBDT Circular No. 3/2022 dated 3 February 2022 and on the Supreme Court's order of 19 September 2023 in Civil Appeal No. 1420 of 2023 in the Nestle SA matter.
The cross-objection was partly allowed for statistical purposes. The additional ground, though a legal ground, required verification of facts, and the issue was restored to the Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard and after bringing on record all the necessary facts.
At paragraph 17 the Bench held that the additional ground was admittedly a legal ground but also required verification of certain facts. It read paragraph 8.13 of the Kolkata Bench's decision in DCIT v. Indian Oil Petronas (P) Ltd. as holding that the rate of tax payable on dividend distribution to non-resident shareholders depends on the relevant Article of the treaty between India and the shareholder's country, subject to conditions being fulfilled — whether the dividend constitutes income in the hands of the non-resident shareholders, whether the non-resident shareholder is the beneficial owner of the dividend, and that the non-resident shareholder should not have a permanent establishment in India — and found that none of those facts emerged from the grounds raised or the material before the Tribunal. It then held that before the Bombay High Court in Colorcon Asia the issue of the protocol was not considered, nor the impact of the Supreme Court's decision in the Nestle SA matter, which it thought could be because what was argued there was a ten per cent rate and not a lower five per cent, and that this too would have to be considered on the India-Netherlands treaty in the appeal before it, in so far as certain protocols do exist in that treaty and it would have to be considered whether they relate to dividend or to dividend distribution tax. On that footing the issue was restored.
A perusal of the facts also further shows that before the Hon'ble Bombay High Court in the case of Colorcon Asia Pvt. Ltd. referred to supra, the issue of the protocol was not considered nor the impact of the decision of the Hon'ble Supreme Court in the case of M/s Nestle SA referred to supra.
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Handle my notice → Ask a CA on WhatsAppIt will want more. The Kolkata Tribunal admitted the additional ground but declined to decide it, restoring the issue to the Assessing Officer for re-adjudication. It held that although the ground is a legal one it requires verification of facts, and it identified three things that had to be established on the Kolkata Bench's own earlier decision in Indian Oil Petronas — that the dividend constitutes income in the hands of the non-resident shareholder, that the shareholder is the beneficial owner, and that the shareholder has no permanent establishment in India — and two things not considered in Colorcon Asia, namely the protocol to the treaty and the effect of the Supreme Court's decision in Nestle SA. This was decided by the ITAT (Shri George Mathan, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member (ITAT 'C' Bench, Kolkata)) and bears on section 115-O, section 90, section 10(34) of the Income Tax Act 1961. It is reported as C.O. No. 125/Kol/2017, assessment year 2010-11; heard 1 April 2026, pronounced 8 June 2026. This is the most useful decision in the line for a practitioner, because it tells you what your file must contain rather than what the law is. Bata had paid DDT suo motu at 16.995 per cent and argued for ten per cent under Article 10 of the India-Netherlands treaty, and the Tribunal put a series of questions that no one had answered: had the tax been collected by the Assessing Officer or paid voluntarily (it was voluntary); had the DDT been reduced from the dividend paid out (it had not — the dividend was paid in full); and how, on those facts, a question of law arose at all. The protocol point is the one that will decide many of these cases. The Departmental Representative relied on CBDT Circular No. 3/2022 dated 3 February 2022 and on the Supreme Court's decision in the Nestle SA matter (Civil Appeal No. 1420 of 2023, order dated 19 September 2023). The assessee's answer was that the circular concerned protocols, that the Supreme Court in Nestle SA had negated attempts to claim, by force of a protocol, a rate even lower than the treaty rate, and that Nestle SA did not dislodge Colorcon Asia. The Tribunal did not choose between them; it held that the point had to be examined, expressly recording that before the Bombay High Court in Colorcon Asia the protocol issue was not considered, nor the impact of Nestle SA, possibly because what was argued there was ten per cent and not a lower five per cent. Anyone whose claim depends on a protocol or a most-favoured-nation clause must therefore treat Colorcon Asia as not covering the point. Note also the Tribunal's reference to paragraph 8.13 of the Kolkata Bench's decision in DCIT v. Indian Oil Petronas (P) Ltd., which it read as making the treaty rate conditional on those three findings of fact. That is the checklist to build the file around. If it applies to you, the first step is this: Build the factual record before you argue the rate: that the dividend constitutes income in the hands of the non-resident shareholder, that the shareholder is the beneficial owner of it, and that the shareholder has no permanent establishment in India.
On a cross-objection for assessment year 2010-11 the assessee raised an additional ground that dividend distribution tax was payable at ten per cent under Article 10 of the India-Netherlands double taxation avoidance agreement rather than at 16.995 per cent under s.115-O, and sought a direction to the Assessing Officer to refund the excess. On the Tribunal's questions it emerged that the tax had been paid suo motu by the assessee at 16.995 per cent, that the assessee had recognised the claim only in 2017, that the dividend had been paid in its entirety and the DDT had not been reduced from the dividend pay-out, and that the claim was said to have arisen from the Supreme Court's decision in Union of India v. Tata Tea Co. Pvt. Ltd., 398 ITR 260. The assessee relied on the Mumbai Special Bench decision in DCIT v. Total Oil India Pvt. Ltd. in ITA No. 6887/Mum/2019 as the origin of the controversy, on the Bombay High Court in Colorcon Asia Pvt. Ltd., on the Delhi Tribunal in Mitsui Kinzoku Components India Pvt. Ltd. (ITA Nos. 3910, 3911 and 3912/Del/2024) and on the Kolkata Bench in DCIT v. Indian Oil Petronas (P) Ltd., 127 taxmann.com 389. The Departmental Representative said the issue had not been before the Assessing Officer or the Commissioner (Appeals), that the treaty needed to be examined, that he had no objection to a restoration, and relied on CBDT Circular No. 3/2022 dated 3 February 2022 and on the Supreme Court's order of 19 September 2023 in Civil Appeal No. 1420 of 2023 in the Nestle SA matter. The matter was decided on 2026-06-08 by the ITAT (Shri George Mathan, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member (ITAT 'C' Bench, Kolkata)). On those facts the ITAT held as follows. The cross-objection was partly allowed for statistical purposes. The additional ground, though a legal ground, required verification of facts, and the issue was restored to the Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard and after bringing on record all the necessary facts.
At paragraph 17 the Bench held that the additional ground was admittedly a legal ground but also required verification of certain facts. It read paragraph 8.13 of the Kolkata Bench's decision in DCIT v. Indian Oil Petronas (P) Ltd. as holding that the rate of tax payable on dividend distribution to non-resident shareholders depends on the relevant Article of the treaty between India and the shareholder's country, subject to conditions being fulfilled — whether the dividend constitutes income in the hands of the non-resident shareholders, whether the non-resident shareholder is the beneficial owner of the dividend, and that the non-resident shareholder should not have a permanent establishment in India — and found that none of those facts emerged from the grounds raised or the material before the Tribunal. It then held that before the Bombay High Court in Colorcon Asia the issue of the protocol was not considered, nor the impact of the Supreme Court's decision in the Nestle SA matter, which it thought could be because what was argued there was a ten per cent rate and not a lower five per cent, and that this too would have to be considered on the India-Netherlands treaty in the appeal before it, in so far as certain protocols do exist in that treaty and it would have to be considered whether they relate to dividend or to dividend distribution tax. On that footing the issue was restored. In the words reproduced by the source cited on this page: "A perusal of the facts also further shows that before the Hon'ble Bombay High Court in the case of Colorcon Asia Pvt. Ltd. referred to supra, the issue of the protocol was not considered nor the impact of the decision of the Hon'ble Supreme Court in the case of M/s Nestle SA referred to supra." The decision followed or applied DCIT v. Indian Oil Petronas (P) Ltd., 127 taxmann.com 389 (ITAT Kolkata) — paragraph 8.13 applied as the condition checklist; M/s. Colorcon Asia Pvt. Ltd. v. Joint Commissioner of Income Tax (Bombay High Court at Goa, 28 November 2025) — considered; held not to have dealt with the protocol point or with Nestle SA; Mitsui Kinzoku Components India Pvt. Ltd. v. DCIT (ITAT Delhi) — relied on by the assessee; DCIT v. Total Oil India Pvt. Ltd. (Special Bench, ITAT Mumbai) — origin of the controversy.
It was decided by the ITAT on 2026-06-08 and is reported as C.O. No. 125/Kol/2017, assessment year 2010-11; heard 1 April 2026, pronounced 8 June 2026. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 115-O, section 90, section 10(34), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The cross-objection was partly allowed for statistical purposes. The additional ground, though a legal ground, required verification of facts, and the issue was restored to the Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard and after bringing on record all the necessary facts. It arises in How Tax Law Is Read and Appeals matters, on section 115-O, section 90, section 10(34) of the Income Tax Act 1961, and was decided by Shri George Mathan, Judicial Member and Shri Laxmi Prasad Sahu, Accountant Member (ITAT 'C' Bench, Kolkata). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Read the protocol to the relevant treaty and decide whether your claim depends on it. If it does, address CBDT Circular No. 3/2022 dated 3 February 2022 and the Supreme Court's order of 19 September 2023 in the Nestle SA matter directly; Colorcon Asia does not cover a protocol or most-favoured-nation claim. Record whether the DDT was paid voluntarily or collected, and whether it was borne by the company or deducted from the dividend paid out — the Tribunal asked both questions and they went to whether any question of law arose at all. If facts are missing, ask for a remand rather than a decision. The additional ground was admitted here as a legal ground and then restored for fact-finding, which preserves the claim. Where the treaty rate you seek is below the rate in the dividend article itself, expect the Nestle SA point to be taken against you and prepare it in advance.
Searched for later treatment; none was found. That is not the same as a source affirming it. A `citedby:` citator search on this order's Indian Kanoon id returns no later decision citing it. A second, differently worded probe - the assessee's name restricted to documents from 8 June 2026 onward, across all courts including the High Courts and the Supreme Court - turned up no judicial treatment either. "Bata India" alone returns 52 documents, all trademark (Crocs Inc USA v Bata India, Delhi High Court, 2 July 2026) or labour matters; a third, tax-specific probe pairing the name with "dividend distribution tax" returns this order and nothing else. Since the Tribunal restored the treaty-rate question to the Assessing Officer, the point remains open below rather than settled. In particular no appeal under section 260A, and so no High Court reversal, could be traced, and no later Bench was found taking the opposite view. This is a June 2026 order, so the silence reflects its age rather than any doubt about it: a practitioner may cite it as the only direct authority on the point but should not expect it to be treated as settled. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The paragraph numbering of this order was established by transcription: 1, 2, 3, 4, 5, 6, 6.1, 6.2, 6.3, 7, 8, 9, 10, 11, 11.1, 12, 13, 14, 15, 16, 17, 18, with paragraph 18 the last — 'In the result, the cross-objection filed by the assessee is partly allowed for statistical purposes.' Paragraphs 14 to 18 were transcribed verbatim via ?type=print, and a shorter, elided version of the same paragraphs was obtained on the plain document page; the two are consistent, and this entry uses the full ?type=print text. One gap in the record: at paragraph 15 the order sets out what the Supreme Court held in the Nestle SA matter by way of a block quotation, and in the text I retrieved that block came through as running headers only ('C.O No.125/Kol/2017 / Bata India Ltd.') with the quoted holding missing, so I have NOT reproduced what the Supreme Court is said to have held and this entry makes no claim about it. The citation '(2015) 181 taxmann.com 301' printed in paragraph 14 for Colorcon Asia is plainly a typographical error for 2025; the same citation appears as (2025) in the Mumbai Tribunal's order in Kansai Nerolac Paints Ltd. The statement in paragraph 14 that the Bombay High Court 'reversed' the Special Bench, and its description of the High Court's holding, are recorded as the submission of the assessee's counsel, not as findings of this Tribunal, and are not adopted here. One number reproduced from this order is wrong in the order itself and should not be repeated as a citation. At the passages recording counsel's reliance, this order prints the Special Bench decision as "DCIT v. Total Oil India P. Ltd., ITA No. 6887/MUM/2019" and again as "ITA No.6887/Mum/2019". The Special Bench order's own header reads ITA No. 6997/MUM/2019 with C.O. No. 57/MUM/2019, AY 2016-17, pronounced 20 April 2023, which was confirmed at verification from the order itself. The facts field of this entry reproduces the order's number faithfully; a reader citing the Special Bench should cite 6997, not 6887. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The cross-objection was partly allowed for statistical purposes. The additional ground, though a legal ground, required verification of facts, and the issue was restored to the Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard and after bringing on record all the necessary facts.
TaxSphere, “Bata India Ltd. v. ACIT”, https://taxnotice.vittsphere.com/caselaw/case/bata-india-ddt-treaty-claim-protocol-and-nestle-restored-to-ao/ (validity last checked 2026-09-08)
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