MADAN MOHAN RYALI,VISAKHAPATNAM vs. THE INCOME TAX OFFICER, WARD-3(3), VISAKHAPATNAM

The only grievance of the appellant in this case is that the Central Processing Centre (“CPC”) did not grant Foreign Tax Credit (“FTC”) of Rs.5.3 lakhs claimed by the appellant u/s 90A of the Act. The appellant in his grounds of appeal has stated that the disallowance claimed by the appellant u/s 90A is outside the purview of section143(1) of the Act and the CPC does not have power to disallow the tax relief. It was also mentioned in the grounds of appeal that the CPC is not justified in levying interest u/s 234B and 234C of the Act. The Ld.CPC did not give credit to the FTC, because Form 67, which is prescribed for the claim of FTC was not enclosed along with the return of income furnished subsequently. On that ground, the CPC did not give credit and the Addl.CIT also did not give relief only due to the reason that Form 67 was not furnished within the prescribed time and the same was not available on record when the CPC processed the return of income.

The Ld.AR of the appellant has relied on various orders of Tribunals, including that of coordinate Bench decision of ITAT, Visakhapatnam in this regard and requested the Bench to give a direction to the Ld.AO to allow FTC u/s 90A of the Act.

The Ld.DR has argued that the procedure laid down for claiming FTC is to enclose a copy of FTC along with return of income and this mandatory procedure was not followed by the appellant, hence, the CPC and the Ld.CIT(A) are correct in not granting credit to the taxes paid in the foreign country. Hence, the appeal may be dismissed, argued, Ld.DR.

After hearing both the sides, it is observed that across the country, several Tribunals have taken a decision and granted FTC to the assessees even though FTC form was submitted subsequent to filing of return by holding that the claim of the assessee is genuine and there is proof that the appellant has paid the tax in a foreign country. The Double Tax Avoidance Agreement (“DTAA”) stipulates that the taxes paid in a foreign country should be given credit to the appellant and the provisions of DTAA override the provisions of Income Tax Act. Since the case of assessee is squarely covered by the decisions of various Tribunals, including the decision of coordinate Bench of Visakhapatnam in the case of Srikanth Atluri in ITA No.97/Viz/2026 dated 12.06.2026, the appellant gets relief and the Department is directed to give credit to the taxes paid in the foreign country.

In the result, appeal of the assessee is allowed.