TaxTMI 
TaxTMI 
2026 (9) TMI 438
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.... On the facts and circumstances of the case and in law, the learned CIT(A) has erred in denying the additional claim of the Appellant by holding that Rule 46A of the Income tax Rules, 1962 cannot be invoked in the given case. The Appellant prays that the learned Assessing Officer be directed to allow deduction for foreign taxes paid to the extent of credit not allowed as business expense incurred in connection with export of services and reduce the total income accordingly." 2. Briefly, the facts of the case are that the assessment in this case was completed under section 143(3) read with Section 144B of the Act, vide order dated 21.03.2024. The assessee, thereafter, carried the matter in appeal before the ld. CIT(A) against the short credit of TDS, levy of interest, fees and non-grant of interest under section 244A of the Act and, as part of its grounds of appeal, the assessee also raised an additional ground of appeal before the ld. CIT(A), wherein directions were sought to the Assessing Officer to allow deduction under section 37(1) in respect of withholding tax paid abroad (to the extent credit for such tax cannot be claimed by the assessee) by treating the s....
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....refore evident from the return of income/computation of income as well as Form 67 so filed by the assessee and therefore, it is a matter of record. It was fairly submitted that as against the figure of Rs. 50,41,899/-, the assessee has furnished a revised and lower working of Rs. 49,63,752/- before the ld CIT(A) which has apparently been considered as additional evidence resulting in dismissal of the additional ground of appeal. At the same time, it was submitted that given that the assessee could not claim the foreign tax credit, the assessee raised an alternate claim before the ld. CIT(A) by way of the additional ground of appeal, and which has been summarily dismissed by the ld. CIT(A). 6. Further, our reference was drawn to Section 40(a)(ii) of the Act, and it was submitted that in terms of Explanation 1, foreign taxes which are eligible for relief under Section 90/91 of the Act, attracts disallowance under section 40(a)(ii) of the Act. In other words, foreign taxes which are not eligible for relief under section 90/91 are specifically excluded by Explanation 1 and therefore, do not attract any disallowance under section 40(a)(ii) of the Act and in light of the same, in the ....
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...., Maldives, Oman and Singapore totaling to Rs 3,46,36,032/-, amount of taxes paid in foreign countries (by way of withholding taxes) totaling to Rs 50,41,899/-, tax payable in India on such foreign sourced income under normal provisions of the Act totaling to Rs 87,17,196/- and the amount of foreign tax credit claimed amounting to Rs 50,41,899/- and the fact that such foreign taxes have not been allowed while processing the return of income u/s 143(1) and thereafter, in terms of assessment order so passed u/s 143(3) of the Act. We therefore find that where all relevant information is already available on record, the claim so made by the assessee, to allow deduction under section 37(1) in respect of withholding tax paid abroad, where credit for such taxes cannot be claimed by the assessee in terms of section 90/91, by treating the same as business expense incurred in connection with export of services, is a legal claim which deserves to be examined on merits rather than dismissal at the threshold. The fact that the assessee has filed a working revising its claim of foreign tax credit downwards from Rs 50,41,899/- to Rs 49,63,752/- where rest all figures remain the same, cannot be he....
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....0A of the Act. 13. Explanation 3 to Section 40(a)(ii) provides that, for the removal of doubts, it is hereby clarified that for the purposes of this sub-clause, the term "tax" shall include and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. 14. For the purposes of the present case, what is relevant is Explanation 1 to Section 40(a)(ii) of the Act and the question that arises for consideration is whether the assessee has paid any tax which is eligible for relief of tax under Section 90 or eligible for deduction from Indian income tax payable under Section 91 of the Act. The emphasis is on the "sum eligible for relief/deduction under Section 90/91" of the Act. In the instant case, as evident from Form No. 67, we find that the assessee has earned income from sources outside of India, namely Maldives, Oman, and Singapore, and taxes amounting to Rs. 50,41,899/- have been paid by way of withholding tax on such foreign-sourced income in the respective countries. Further, given the fact that these foreign-sourced incomes are included as part of the income offered to tax under the normal provisions of this Act, the assessee satisfi....
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.... accrued in India, and therefore, outside the scope of double taxed income for the benefit of Section 91 of the Act. It was submitted that the assessee has however paid taxes on Rs 1000/- in Saudi Arabia @ 10% i.e, Rs 100/. It was submitted that the credit which would be given to the assessee under Section 91 of the Act is to the extent of Rs. 85/-, i.e., double taxed income amounting to Rs. 850/-. However, as no credit is given for the tax of Rs. 15 paid in Saudi Arabia on income which is accrued in India, the deduction of Rs. 15/- should be given as an expenditure from the income of Rs. 150/- which has accrued or arisen in India. We therefore, find that the facts for consideration before the Hon'ble Bombay High Court were that where in respect of an assessee, which has income accrued/arisen outside of India (doubly taxed) and income accrued/arisen in India, such latter percentage of income which had accrued or arisen in India, and on which the benefit of Section 91 was not available and in that background, whether the taxes paid in Saudi Arabia should be treated as an expenditure incurred in earning income which is deemed to have accrued or arisen in India and reduced therefr....