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Income Tax Appellate Tribunal, DELHIBENCH ‘F’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals has been filed by the assessees against the orders of ld. CIT(A)-21, New Delhi dated 25.06.2018.
Since, the issues involved both the appeals are similar, they were heard together and being adjudicated by a common order.
ITA No. 5840/Del/2018 2 Ravinder Bansal, ITA No. 5841/Del/2018 Rahul Gupta 3. In ITA No. 5840/Del/2018, the assessee has raised the following grounds of appeal:
“1. The Hon'ble CIT(A) has grossly erred in the facts and circumstances of the case and in law in not accepting the contention of the appellant for considering the revised computation of income furnished during assessment proceedings on the premise that the claim cannot be entertained unless made in the return of income (original or revised).
The Hon'ble CIT(A) has grossly erred in the facts and circumstances of the case and in law in ignoring the following:
(i) the Judicial precedents cited on non-applicability of the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd, 284 ITR 323 for considering the revised computation during assessment proceedings;
(ii) The order suffers from non-observance of the principles of natural justice as the legal issue of non- applicability of the decision in the case of Goetze basis the several decisions in favour of appellant was neither raised nor any clarification sought on the same;
(iii) There was no fresh claim and there was a mere modification of claim during assessment proceedings;
(iv) The evidence furnished during assessment i.e. foreign tax returns and proof of payment of taxes in host country supporting the modified claim has been ignored.”
The assessee has also raised the following additional grounds of appeal:
“3. Erred in granting short Foreign Tax Credit to the assessee to the extent of Rs.21,89,295/- (i.e. of Rs.44,85,507/-) as against Rs.66,74,802/- as claimed by the assessee as per revised claim filed during assessment proceedings) where in fact the AO has himself accepted the additional Kenya salary income filed in revised computation (in other words, AO taxes income without granting credit for taxes
ITA No. 5840/Del/2018 3 Ravinder Bansal, ITA No. 5841/Del/2018 Rahul Gupta paid/deducted in Kenya) and has not appreciated that assessee has paid taxes in Kenya and is eligible to claim Foreign Tax credit as per India-Kenya DTAA.
erred in denying Foreign Tax Credit to the assessee merely on the basis that the deductor had not filed revised TDS return.”
The assessee was a Resident of India as per the Act for the relevant assessment year and was employed with Bharti Airtel Services Limited (hereinafter referred to as “BASL”) and Bharti Airtel Limited (hereinafter referred to as “BAL”).
The assessee filed return of income on 31.07.2014 declaring a total taxable income of Rs.3,41,81,660/-. The copy of return of Income along with computation of Income is enclosed herewith as Annexure 3 from Page 13 to 40 of the paper book. The break-up of total taxable income is as under:
S. No. Particulars Amount (INR) 1. Salary from BAL 1,04,95,709 2. Salary from BASL 2,26,44,970 3. Income from house property 7,82,173 4. Income from other sources 3,68,813 5. Deduction under chapter VIA (1,00,000) (Section 80C of the Act) 6. Deduction under chapter VIA (10,000) (Section 80TTA of the Act) Total taxable income (as per return of 3,41,81,660
The total tax payable as per the return of income was Rs.2,72,400/-, after claiming relief of Rs.34,14,015/- on account of double taxation under the provisions of Section 90/91 of the Act read with Article 25 of the India-Kenya Double Taxation Avoidance Agreement.
ITA No. 5840/Del/2018 4 Ravinder Bansal, ITA No. 5841/Del/2018 Rahul Gupta
During the assessment proceedings, the appellant offered overseas salary income amounting to Rs.35,71,641/- omitted to be offered to tax earlier, inadvertently due to a data reporting error. Accordingly, the appellant claimed revised foreign tax credit amounting to Rs. 66,74,802/- during assessment proceedings vide submission dated September 9, 2016. Thus, the revised foreign tax credit resulted in a refund of Rs.11,97,109/- to the appellant, basis the taxes due and paid in Kenya in the return of income filed.
On September 9, 2016, the appellant offered the additional overseas income to tax as a bonafide data reporting human error came to the notice of the appellant at that stage.
The assessee having voluntarily offered overseas salary income amounting to Rs.35,71,641/-, inadvertently omitted to be offered to tax earlier, claimed foreign tax credit amounting to Rs.66,74,802/- vide submission dated September 9, 2016. Thus, it is apparent that the error in reporting the overseas income was bonafide as the same resulted in enhanced foreign tax credit/refund due to the assessee.
Based on the above submission, the Assessing Officer added the income offered amounting to Rs.35,71,641/- and allowed foreign tax credit of Rs. 44,85,507/- (basis the Original computation) completely ignoring the submission filed on September 9, 2016 in this regard, claiming total foreign tax credit of Rs.66,74,802/- revised at this stage.
The Assessing Officer has granted only partial foreign tax credit amounting to Rs.44,85,507/- and has omitted to allow the additional relief claimed amounting to Rs.21,85,295/-. The total foreign tax credit due to the appellant amounts to Rs.66,74,802/-,based on the the additional overseas income offered to tax during assessment proceedings.
ITA No. 5840/Del/2018 5 Ravinder Bansal, ITA No. 5841/Del/2018 Rahul Gupta 6. The only tangible ground of Appeal arising in the present Appeal is as under:
The learned Assessing Officer has erred in providing the relief claimed under Section 90 of the Act read with Article 25 of the Double Tax Avoidance Agreement entered between India and Kenya assessing the total relief claimed under Section 90 at Rs.44,85,507/- as against relief claimed of Rs.66,74,802/- as per the revised tax computation submitted during the course of assessment proceedings.
It was argued that the assessee qualified as a “Resident and Ordinarily Resident” of India for AY 2014-15, and duly offered his worldwide income to tax in India. Accordingly, the appellant filed his return of income for AY 2014-15 in India duly reporting his Kenya sourced salary income and claimed relief under the provisions of Section 90 of the Act read with Article 25 sub article 2(a) of the India Kenya Double Tax Avoidance Agreement (“DTAA”). The assessee filed letter dated September 9, 2016 duly furnishing the following details in support of the foreign tax credit claimed:
- Copy of the relevant provisions of Article 25 of the India Kenya DTAA - Computation of foreign tax credit claimed - Proof of payment of taxes in Kenya i.e. Kenya tax return for 2013
We find that the Assessing officer while including the overseas income has omitted to grant the excess foreign tax credit amounting to Rs.21,89,295/- (Rs.66,74,802/- less Rs.44,85,507/-), due to the assessee.
ITA No. 5840/Del/2018 6 Ravinder Bansal, ITA No. 5841/Del/2018 Rahul Gupta 9. The ld. CIT(A) dismissed the appeal of the assessee on the grounds that the employer has not at revised his TDS return and hence the order of the Assessing Officer is affirmed.
Placing reliance on the judgment of Hon’ble Supreme Court in the case of Goetz (India) Ltd. 284 ITR 323, the appellate authorities are empower to accord the right relief to the assessee. Hence, we hereby direct the AO to consider the entire taxes paid in India and Tanzania and give due credit to the taxes deposited of Rs.19,26,610/- as per Form 26AS. The AO shall also accord foreign tax credit as per the revised claim filed by the assessee. The tax credit to the assessee cannot be denied merely on the grounds that the deductor has not filed its revised TDS return which is beyond the control of the assessee. Ordered accordingly.
In the result, the appeals of the assessees are allowed. Order Pronounced in the Open Court on 02/03/2023.
Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 02/03/2023 *Subodh Kumar/AK, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR