Foreign tax credit for UK and US tax deducted on India-taxable income was allowed and rectifiable under section 154.

Foreign tax deducted in the United Kingdom and the United States on income already offered to tax in India was held to be creditable under section 90 and the applicable double taxation avoidance agreements, because the treaty provisions allowed relief where the same income was taxable in both jurisdictions, subject to the prescribed limits. The Tribunal also treated the claim as suitable for rectification under section 154, as the foreign tax related to income included in the Indian return and no substantive controversy remained outside the record.

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Issues: Whether credit for tax deducted at source in the United Kingdom and the United States on income offered to tax in India could be allowed in rectification proceedings under section 154 and whether the assessee was entitled to such foreign tax credit under section 90 and the applicable double taxation avoidance agreements.

Analysis: The income on which tax had been deducted abroad was included in the assessee's total income in India. Section 90, read with the relevant treaty provisions, permits relief where India has entered into a double taxation avoidance agreement, and such agreement operates to the extent it is more beneficial to the assessee. The treaty articles governing credit for tax paid in the United Kingdom and the United States provided that foreign tax paid on income taxable in both jurisdictions was to be allowed as a credit against Indian tax, subject to the prescribed limitation. On the facts, the foreign tax deducted was relatable to income offered in India, and no real controversy remained that would take the matter outside rectification.

Conclusion: The assessee was entitled to credit for the foreign tax deducted in the United Kingdom and the United States, and the issue was amenable to rectification under section 154.

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