2023 (1) TMI 1070 - AT - Income Tax

Appellate Tribunal directs Assessing Officer to grant foreign tax credit claim and refund

Rohan Hattangadi Versus CIT (A), Faceless Appeal Centre, Delhi

Rohan Hattangadi Versus CIT (A), Faceless Appeal Centre, Delhi - TMI Issues:1. Non-grant of Foreign tax relief2. Interest under section 244A and refund3. Confirmation of demand by the Learned AOAnalysis:Issue 1: Non-grant of Foreign tax reliefThe appellant challenged the order of the learned Commissioner of Income Tax (Appeals) regarding the non-granting of foreign tax relief amounting to Rs.26,718 as claimed in the revised Return of Income for A.Y. 2020-21. The appellant contended that the income of Rs.4,12,835 was doubly taxed, and taxes paid in Sri Lanka on this income should be allowed as relief under Article 23(2) of the India-Sri Lanka Tax Treaty. The Appellate Tribunal noted that the appellant filed Form No. 67 for claiming foreign tax relief after the due date for filing the return of income, which led to the rejection of the claim by the lower authorities. However, the Tribunal considered the delay in filing Form No. 67 as a procedural defect and held that provisions of Double Taxation Avoidance Agreement (DTAA) should override procedural requirements to benefit the assessee. Relying on previous decisions and the intention of legislation to benefit the assessee, the Tribunal directed the Assessing Officer to allow the foreign tax credit claim and grant the refund as per the law.Issue 2: Interest under section 244A and refundThe appellant also raised concerns regarding the direction to grant a refund of Rs.21,250 along with interest under section 244A, which was not followed by the learned NFAC. The Tribunal observed discrepancies in the refund issued to the appellant and the total demand raised, which included the refund granted. The appellant had submitted Form No. 67 and a certificate of taxes paid in Sri Lanka to rectify the mistake of non-grant of foreign tax credit. The Tribunal, after considering the relevant rules and precedents, directed the Assessing Officer to grant the refund and interest under section 244A as claimed by the appellant.Issue 3: Confirmation of demand by the Learned AOThe learned NFAC confirmed a demand of Rs.7,850 raised by the Learned AO on processing the revised return of the appellant. The Tribunal found that the rejection of the foreign tax credit claim by the lower authorities was based on the delayed filing of Form No. 67. However, the Tribunal held that the delay in filing the form should not disentitle the appellant from claiming foreign tax credit under the DTAA provisions. By following previous decisions and considering the legislative intent to benefit the assessee, the Tribunal allowed the appeal filed by the appellant, directing the Assessing Officer to allow the foreign tax credit claim and grant the refund accordingly.In conclusion, the Appellate Tribunal allowed the appeal of the assessee, directing the Assessing Officer to grant the foreign tax credit claim, refund, and interest under section 244A as per the law and relevant provisions.