ITAT Delhi Grants Relief to Intertek India on One-Day PF Delay Due to Technical Glitch, Orders Refund of Excess DDT on UK Dividends

January 08, 2026 : The Delhi Bench of the Income Tax Appellate Tribunal has granted significant relief to Intertek India Private Limited, holding that a one-day delay in depositing employees’ provident fund contribution caused by technical glitches cannot result in disallowance. The Tribunal also ruled that excess Dividend Distribution Tax paid on dividends remitted to the company’s UK parent is refundable in view of the India–UK tax treaty.

The Bench, comprising Judicial Member Challa Nagendra Prasad and Accountant Member M. Balaganesh, was hearing appeals for Assessment Years 2016–17 and 2017–18 arising from a common order passed by the National Faceless Appeal Centre. The appeals challenged, among other issues, disallowance of employees’ PF contribution and denial of refund of excess DDT.

For AY 2016–17, the Assessing Officer had disallowed ₹33.38 lakh representing employees’ contribution to provident fund on the ground that the January 2016 contribution was deposited on 16 February 2016, one day after the statutory due date of 15 February 2016. The disallowance was made by relying on the Supreme Court decision in Checkmate Services Pvt. Ltd. v. CIT, which requires strict adherence to timelines for depositing employees’ contributions.

Before the Tribunal, the assessee explained that the delay was entirely attributable to technical glitches on the provident fund payment portal on the due date. It pointed out that attempts were made to remit the amount through net banking on 15 February 2016, but the payment gateway displayed an error message stating that it was experiencing network delays. Screenshots of the error message, a cheque dated 15 February 2016 covering both employees’ and employer’s contributions, and an email grievance lodged with the PF authorities on the same day were placed on record.

The Tribunal noted that the existence of technical glitches was not disputed by the Revenue and that sufficient evidence had been produced to establish that payment on the due date was impossible. Applying the principle of lex non cogit ad impossibilia, the Bench held that the law does not compel a person to do the impossible and that the assessee could not be penalised for circumstances beyond its control. It also found that the assessee’s bona fide intention to make timely payment was clearly established. On these facts, the Supreme Court ruling in Checkmate Services was held to be distinguishable, and the Assessing Officer was directed to allow the deduction by treating the employees’ PF contribution as having been remitted within the due date.

A second major issue, common to both assessment years, concerned the refund of excess DDT paid on dividends distributed to a non-resident shareholder in the United Kingdom. The assessee had paid DDT at the domestic rate of 20.36 percent under Section 115-O of the Income Tax Act but later claimed that under Article 11 of the India–UK Double Taxation Avoidance Agreement, the applicable rate should be restricted to 10 percent. The refund claim had been rejected by the tax authorities on the basis of the Special Bench decision of the Mumbai Tribunal in DCIT v. Total Oil India Pvt. Ltd., which held that treaty benefits do not apply to DDT.

The Delhi Bench took note of the subsequent reversal of that Special Bench ruling by the Bombay High Court in November 2025, which held that treaty provisions override domestic law even in the context of DDT. Following the High Court’s decision, the Tribunal held that dividends paid to a UK parent company are entitled to the concessional treaty rate and directed the Assessing Officer to refund the excess DDT paid by the assessee.

The Tribunal also directed the Assessing Officer to grant TDS credit as per the revised return, subject to factual verification. The ground relating to levy of interest under Section 234B was held to be consequential. The challenge to computation of book profit under Section 115JB was dismissed as not pressed, and the initiation of penalty proceedings under Section 271(1)(c) was held to be unsustainable in light of the relief granted on merits.

For AY 2017–18, the Tribunal applied its findings from AY 2016–17 mutatis mutandis, except in respect of the PF issue, which did not arise in that year. Both appeals were accordingly partly allowed for statistical purposes.

Cause Title: Intertek India Private Limited v. ACIT
Case No.: ITA No. 2903/Del/2025
Coram: Challa Nagendra Prasad (Judicial Member) and M. Balaganesh (Accountant Member)