TaxTMI 
TaxTMI 
2023 (1) TMI 514
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.... as "the Act") relevant to the Assessment Year 2014-2015. 2. The assessee has raised following grounds of appeal: 1. The Learned CIT(A) has grossly erred in law and on facts of the case in confirming the action of Id. AO in not granting Foreign Tax Credit of Rs.4,22,679/- as claimed by the Appellant u/s 91 of the Act. 2. The Ld. CIT(A) has erred in following the order his predecessor for A.Y. 2012-13 and not considering the submission made by the appellant. 3. The Ld. CIT(A) ought to have granted deduction of un allowed Foreign Tax Credit of Rs. 4,22,679/- u/s 37 of the IT Act, 1961. 4. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s 234A/B/C of the Act. ....
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....greed with the contention of the assessee by observing that the tax in the foreign country cannot be applied to the amount of gross receipts. As such, the amount of income which is getting tax twice should be worked out for determining the rate of tax in the foreign country and the same needs to be compared with the rate of tax in India. Accordingly, the AO held that the expenses incurred by the assessee against the gross income from foreign countries needs to be adjusted for determining the rate of tax in the foreign country. But the assessee has not furnished the detailed computation of allowable tax credit of foreign countries. Thus the AO disallowed the same. 6. On appeal learned CIT (A) upheld the finding of the AO 7. Being aggrieved....
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.... assessee. Accordingly, the AO worked out the proportionate amount of tax with respect to foreign income amounting to Rs. 1,28,928 which is eligible for tax relief under section 91 of the Act. The view taken by the AO was subsequently confirmed by the learned CIT (A). 15.1 The controversy before us arises in the given facts and circumstances whether rate of tax in foreign country needs to be determined after considering the gross receipts or the net receipts/profit embedded in such gross receipts. To our mind the explanation (iii) to section 91 of the Act provides mechanism for determining the rate of tax in the foreign country. It requires that the income tax/super tax actually paid in the foreign country as per the laws prevailing ther....
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.... to work out the proportionate amount of income eligible for relief under section 91 of the Act. Accordingly we do not find any infirmity in the order of the authorities below. 15.4 However Before parting, we note that there is force in the alternate argument of the learned AR for the assessee claiming for the deduction of the taxes paid in the foreign country as expenditure under section 37(1) of the Act. The amount of tax paid in a foreign country which is not eligible for benefit under section 91 of the Act, is expenditure eligible for deduction under section 37(1) of the Act. It is because such tax was paid in the course of the business and the corresponding business receipts were made to tax in India. In holding so we draw support a....