Foreign tax credit claim remanded for verification under India-UK treaty, with treaty residence and salary taxability left open.

A claim for foreign tax credit under the India-UK tax treaty, supported by the UK tax return and assignment letter, was sent back for fresh verification by the Assessing Officer. The tribunal did not finally decide the questions of treaty residence or the substantive taxability of the salary income, and kept those issues open. The officer was directed to examine the credit claim and seek any further information required. The interest issue was treated as consequential. The limited relief granted related only to reconsideration of the foreign tax credit claim.

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Issues: Whether the assessee's claim for credit of taxes paid in the United Kingdom on salary attributable to services rendered there should be examined afresh by the Assessing Officer under Article 24 of the India-UK tax treaty.

Analysis: The assessee produced the UK tax return and the assignment letter to support the claim that salary relating to services rendered in the United Kingdom had been offered to tax there. Without adjudicating the remaining questions concerning treaty residence and the substantive taxability of the salary income, the matter was restored to the Assessing Officer for verification of the claim for foreign tax credit and for examination of such further information as may be required. The grounds relating to the substantive treaty position were kept open, and the interest ground was treated as consequential.

Conclusion: The claim for foreign tax credit was remanded to the Assessing Officer for fresh examination, with relief granted to the assessee on that limited issue.

Ratio Decidendi: A claim for credit of foreign taxes, supported by prima facie documents, may be remitted to the Assessing Officer for verification where the substantive issue is not finally adjudicated.

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