BAHWAN CYBERTEK PVT. LTD.,,CHENNAI vs. ACIT, CC-1(1), , CHENNAI

आदेश /O R D E R

PER S. R. RAGHUNATHA, AM : These appeals are filed against the order of the Learned Commissioner of Income Tax (Appeals) -16, Chennai [hereinafter referred to as the “Ld.CIT(A)”] for the assessment year (A.Y.) 2017-18 arising out the final assessment order dated

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26.11.2021 passed by the Assessing Officer, National Faceless Assessment Centre –

Delhi, (AO) u/s.143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter “the Act”).

1.1 At the outset, we find that there is a delay of 29 days in filing the appeal filed by

the revenue and the revenue explained the reasons for delay in filing the appeal. The

revenue has filed affidavit stating the reasons for delay in filing the appeal is due to

extreme work pressure related to time barring set-aside cases, giving effect to

appellate orders, remedial actions in the cases wherein audit observations were made

and to achieve budgetary targets, the workforce was devoted to attending those tasks.

After considering the affidavit filed by the revenue and also hearing both the parties, we find that there is a reasonable cause for the revenue in not filing appeal on or

before the due date prescribed under the law and thus, in the interests of justice, we

condone delay in filing of appeal and admit the appeal filed by the revenue for

adjudication.

ITA No. 1836/CHNY/2024:

engaged in the business of Software Development Services. The assessee filed its

return of income for the A.Y.2017-18 on 30.11.2017 declaring a total income of INR

10,44,46,200. The case was selected for scrutiny through CASS and accordingly

statutory notices were issued to the assessee. During the assessment proceedings,

reference was made to the Transfer Pricing Officer ('TPO') u/s.92CA(1) of the Act for

determination of Arms Length Price ("ALP") in respect of international transactions

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reported in Form No.3CEB. Thereafter, the Assessing Officer ("AO") passed an

assessment order u/s.143(3) r.w.s. 144C(3) of the Act proposing certain additions to

the total income.

Act and the Ld.CIT(A) partly allowed the appeal. Aggrieved by the order of Ld.CIT(A),

the revenue filed this appeal which is taken up for adjudication. Accordingly, the

revenue has raised the following grounds of appeal:

i. The order of the learned CIT(A) is contrary to the facts and circumstances of the case. ii. Whether the LdCIT(A), in the facts and circumstances of the case, is correct in directing to exclude the company M/s Nihilent Ltd the reason being functionally dissimilar whereas as per the annual report of this company it is earning 97% of its revenue from provision of software solutions. iii. Whether the LdCIT(A) is correct in directing to exclude the company M/s. Nihilent Ltd when this company was considered as comparable under the method TNMM where broadly comparable companies can be considered for comparison. iv. Whether the Ld. CIT(A) is correct in directing to re-compute the guarantee fee at the rate of 0.5% ignoring the fact that the TPO has considered CUP as MAM and considered the comparable data given by the assessee itself i.e., 1% guarantee commission and proposed the adjustment. v. The Ld. CIT(A) has erred in accepting the assessee’s contention that the hardware, software expenses merely incurred towards purchases of consumables. vi. The Ld. CIT(A) has failed to furnish the real nature of the said expenses which give enduring benefit to the Assessee and thus capital in nature. vii. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.”

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S. No. Ground Nature of Issues No. Transfer Pricing Issues 1. I General Ground 2. ii & iii Inclusion of M/s. Nihilent Ltd as comparable company 3. Iv Corporate Guarantee fee Other: 4. v & vi Hardware and Software as capital expenditure

revenue’s appeal is inclusion of M/s.Nihilent Limited as a comparable company for the

purpose of determining the arms’ length price of software development services

rendered by the assessee to its Associate Enterprise (“AE”).

M/s. Nihilent Limited was included as part of the list of comparable companies during

the course of assessment proceedings based on independent search conducted by

TPO. The Assessee objected to the inclusion of Nihilent as a comparable company on

the basis that it is functionally dissimilar, engaged in diversified activities and absence

of segmental information. However, the TPO rejected the contentions of the Assessee

stating that it is into Software and Software related services based on the business

classification provided by the company as part of its Annual Report filed before the

Ministry of Corporate Affairs. Accordingly, the TPO retained the same as part of the list

of comparable companies.

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company observed that the company is engaged in diversified business activities apart

from software development services such as consulting, advanced analytics, business

consulting, block chain, data signs and cloud services etc. Further, the Ld.CIT(A)

observed that the business classification provided by the company in its Annual Report

filed before the MCA is inconclusive since the company itself had classified its business

activities into ‘other professional services and business services & other consulting

services NEC’ as part of the Annual Report. Further, relying on the decision of co-

ordinate bench in the case of Carl Zeiss India (P) Limited vs. DCIT (ITA No.

192/Bang/2022) and Subex Limited vs. DCIT [2023] (147 taxmann.com 559) for the AY

2017-18, wherein Nihilent was held to be engaged in diverse business functions and not comparable to company engaged in software development directed exclusion of

M/s.Nihilent Limited from the list of comparable companies. Before us, the Ld.DR

referring to the order of the TPO submitted that the Ld.CIT(A) has erred excluding

M/s.Nihilent Limited as a comparable company on the basis that it is functionally

dissimilar vis-à-vis assessee. The Ld.DR further referred to the Annual Report of

M/s.Nihilent Limited and submitted that the M/s.Nihilent Limited is functionally

comparable to the respondent company since as per Annual Report the business

classification is reported as “IT Consultancy, Software Development and related

services”. Further, referring to the Profit and Loss Account, the Assessee is engaged in

the business of services which is software related services. Hence, the Ld.DR prayed

for inclusion of the same stating the TPO has rightly included the said company as

comparable to the respondent.

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authorities, and have gone through the judicial precedent cited before us. We note from

the Annual report placed on record before us that M/s.Nihilent Limited classified its core

business activity under NIC Code No.99831319 as “other professional, technical and

business services” and the entire turnover during the year is from this core business

activity which is broadly classified as “other IT consultancy services”. The relevant

extract of the Annual Report is as under:

Report as enterprise transformation, digital transformation and enterprise IT services.

Nihilent limited is engaged in global business consulting and IT services solutions. The

relevant extracts of the Annual Report is as under:

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Co-ordinate bench of the Tribunal in the case of Red Hat India Private Limited

Vs.Income Tax Officer (ITA No. 801/Mum/2022) (Mum Trib) for the same A.Y. wherein

it was held that M/s.Nihilent Limited is functionally dissimilar to a company engaged in

software development services and the same was directed to excluded from the list of

comparable companies. The relevant extracts of the tribunal order is as under:

“Nihilent Ltd. The assessee sought exclusion of Nihilent Ltd. as a comparable on the ground that it is functionally dissimilar vis-à-vis assessee. This objection was also raised before the Ld. DRP but rejected. The assessee relied upon website of the company which is made available at page A412 of the paper book wherein Nihilent Ltd. is shown to be engaged in providing advanced analytics, artificial intelligence, blockchain, business intelligence, data signs, cloud services etc. The annual financials of this company available at page A412 & A413 of the paper book shows that it is rendering Enterprise transformation and change management, Digital transformation services and Enterprise IT services but segmental financials are not available as is apparent from its financials available at page A305, A412 & A413 of the paper book. When this company is into various segments but segmental financials are not available it cannot be a valid comparable vis-à-vis assessee which is a routine software development service provider working on cost + markup model, hence ordered to be excluded.”

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[2022] (145 taxmann.com 111) held that the corporate guarantee constitutes a separate

international transaction, however also directed that the corporate guarantee fee be

recomputed at 0.5% of the corporate guarantee value.

that, the issuance of corporate guarantee falls squarely within the ambit of international

transaction as per Section 92B of the Act. Further, Ld.DR argued that a guarantee fee

of 1 percent would be appropriate as computed by the TPO based on the external

analysis of data relating to guarantee commission charged by the banks in India.

Airtel Ltd., vs. ACIT, [2014] 43 taxmann.com 150. The Ld.AR submitted that corporate

guarantee issued by the assessee to its AE is in the nature of shareholding activity and

hence does not constitute an international transaction. The Ld.AR further submitted that

the Assessee being a shareholder had extended corporate guarantee with an intention

to protect its own investment in the subsidiary which does not require any remuneration.

The Ld.AR also argued that extending corporate guarantee to AE creates only a

contingent liability and as such, did not having any bearing on the profits, incomes,

losses or assets of the assessee. Hence, the Ld.AR argued that extending corporate

guarantee to AE cannot be covered within the meaning of international transaction as

per Section 92B of the Act even post the amendment made by Finance Act 2012 to

Section 92B of the Act.

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authorities, material available on record and the judicial precedent cited before us. In

view of the amendment brought out by Finance Act and by inserting Explanation 1(e)

to section 92B(2) of the Act, it is clear that the corporate guarantee is to be treated as

deemed international transaction. Further, in view of the amendment brought out in the

Act, by the Finance Act, 2012, we reject the contentions raised by the assessee. We

also find that the Hon’ble High Court of Bombay in the case of CIT v. Everest Canto

Cylinders Ltd. [2015] 58 taxmann.com 254 held that that bank guarantee issued by the

commercial banks cannot be a yardstick to apply to corporate guarantees issued by an

entity, since the latter arise out of commercial expediency and group considerations

rather than as profit-making instruments.

coordinate bench of this Tribunal in the case of Mega Soft vs DCIT [2022] (145

taxmann.com 111) wherein a guarantee fee of 0.5 percent was held to be appropriate

for the purpose of computing the arm’s length price of corporate guarantee. The

relevant findings are as under:

“9. We have considered relevant materials on record. As regards the arguments of the Ld.AR for the assessee that corporate guarantee per se itself is not an international transaction, we find that after amendment of definition of international transaction, corporate guarantee given by any entity to its AE falls under the definition of international transactions in terms of sec.92B of the Act and thus, any corporate guarantee given by the assessee to its AE is an international transaction, which needs to be bench marked. Further, when it comes to rate, at which, such guarantee commission needs to be benchmarked, then bank guarantee given by the commercial banks cannot be a yardstick to apply to corporate guarantees given by an entity. Further, the guarantee commission rate is depending upon the facts of each case and the risk involved in the transactions between the assessee and its AE. The Hon'ble Madras High Court in the case of Pr. CIT v. Redington (India)Ltd. [2020] 122 taxmann.com 136/[2021] 430 ITR 298 had considered the issue of corporate

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guarantee given by an entity to AEs and after considering relevant facts held that rate adopted by the TPO on the basis of internal comparable uncontrolled price charged by the bank @ 0.85% is reasonable for benchmarking corporate guarantee. The Hon'ble Bombay High Court in the case of CIT v. Everest Kanto Cylinders Ltd.[2015] 58 taxmann.com 254/232 Taxman 307/378 ITR 57/277 CTR 511 had considered an identical transaction and held that 0.5% is appropriate rate for bench marking corporate guarantee given by the assessee to its AE. Therefore, considering the facts and circumstances of the case and also by following the decision of the Hon'ble Bombay High Court in the case of Everest Kanto Cylinders Ltd. (supra), we direct the TPO to benchmark corporate guarantee fees @ 0.5% on total corporate guarantee given by the assessee to its AE.”

Cylinders Ltd. (supra) and by following the decision of coordinate bench in the case of

Mega Soft Ltd. Vs DCIT (supra), we concur with the decision of the Ld.CIT(A) in holding

Corporate guarantee as a separate international transaction and adopting 0.5% as

appropriate for the purpose of computing the arm’s length price of corporate guarantee.

It is ordered accordingly. We, therefore, uphold the order of the Ld.CIT(A) and hence

no interference called for. As a result, Ground No.iv raised by the Revenue stands

dismissed.

revenue’s appeal is in respect of assessee’s claim of hardware and software expenses

incurred as revenue expenditure.

expenses were incurred for creating an intangible assets which has enduring benefits

to the assessee. The Ld. DR drew our attention to Page 458 to 467 of the paper book

filed before us wherein the contract entered into by the Assessee with the customer

was placed detailing various hardware and software involved in relation to the contract.

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By placing his reliance on the contract, the Ld.DR strongly contended that these

hardware and software products stated in the contract would in-turn be utilized for

executing the projects with other customer as well. Accordingly, the Ld.DR submitted

that this would create an enduring benefit to the Assessee and hence constituted a

capital expenditure.

wherein it was held that aforesaid expenditure was merely incurred towards purchase

of software and hardware consumables which were consumed/utilized for the customer

contracts and accordingly, does not result in creation of any intangible asset having

enduring benefit.

records and gone through the orders of the lower authorities. On perusal of the

customer contract referred to by the Ld.DR is between the assessee and the

Commissionerate of Municipal Administration to supply, install, achieve operational

acceptance of the Information system which inter alia includes supply of hardware and

software consumables. As demonstrated by the ld.AR the procurement of hardware

and software were made by the assessee to supply to the ultimate customers as part

of this contract and explained that though these equipments are in the nature of capital

expenditure, it is supply of goods in the contract as a whole. Therefore, we are of the

opinion that this equipment purchased are not a capital expenditure in the hands of the

assessee. Accordingly, we are of the considered view that the aforesaid expenditure

which was incurred by the assessee towards purchase of hardware and software

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consumables for supply to the customers cannot be construed as capital expenditure

resulting in creation of any intangible asset having enduring benefit to the assessee. In

view of the above discussion, we concur with the decision the Ld.CIT(A) on treating the

said expenditure as revenue expenditure and does not require any interference. As a

result, the Ground No.v and vi raised by the Revenue stands dismissed.

CO No.62/CHNY/2024 – AY 2017-18:

appeal and also filed following additional grounds in relation to the same:

“Exclusion of M/s. Nihilent Limited: 1. The Appellant has erred in stating that M/s. Nihilent Limited had earned 97 percent of its revenue from software related services whereas this comparable company has earned revenue from diverse businesses which are not comparable to the Respondent engaged in software development services. 2. The Appellant had grossly erred in not appreciating that M/s. Nihilent Limited is functionally dissimilar and engaged in diverse businesses such as global business consulting, IT Services and Solutions Integration, artificial intelligence, block chain and advanced analytics etc disclosed in the financial statements which are not comparable to the Respondent in engaged in software development services. 3. The Appellant had erred in law and on facts in not considering the decision of co-ordinate Bengaluru bench of the Hon’ble ITAT for the very same AY [M/s. Carl Zeiss India (P) Limited (153 taxmann.com 519) and M/s. Subex Limited (2023) (147 taxmann.com 559)] wherein the above facts have been specifically analysed in relation to M/s. Nihilent Limited and the same has been held to be functionally dissimilar to a software development service provider. Corporate Guarantee: 4. The Appellant had erred in law and on facts by incorrectly stating that the bank guarantee fee of 1% could be considered as CUP for the purpose of benchmarking the corporate guarantee provided to the Assessee’s AEs outside India without appreciating the fact that bank guarantees are not comparable to corporate guarantees.

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“1. The learned AO, TPO and the CIT(A) had erred in law and on facts by including Great Software Laboratory Private Limited and Cygnet Infotech Private Limited for computing the Arm’s Length Margin even though these companies are not comparable to the Petitioner due to various reasons such as functional dissimilarity, non-availability of segmental information, size, geographical area of operations, valuable intangibles, brand and R&D activity.

by the assessee vide the cross objections and additional grounds of cross objection

before us, were primarily directed against the appeal filed by the Revenue. Accordingly,

having dismissed the appeal filed by the Revenue, we are of the considered view that

the cross objections raised by the assessee become academic and infructuous and

hence the CO of the assessee is dismissed.

IT(TP)A No. 22/Chny/2024 – AY 2017-18 by the Assessee:

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“General Grounds:

2.1. The learned AO/TPO/CIT(A) has erred in law and on facts in considering corporate guarantee as a separate international transaction under Section 92B of the Act.

2.2. The learned AO/TPO/CIT(A) ought to have appreciated that provisions of corporate guarantee is in the nature of shareholder activity and as such it cannot be regarded as international transaction. 2.3. The learned AO/TPO/CIT(A) ought to have appreciated that the Appellant does not incur any cost for extending such guarantee and hence the transaction does not have any bearing on the profits, incomes, losses or assets of the company.

2.4. The learned AO/TPO/CIT(A) erred in law and facts by not considering various judicial precedents wherein it was held that the issuance of corporate guarantee may have an influence on profits, income, losses or assets of the entity on whose favour guarantee is issued but it has no impact on person who provided the guarantee as long as it is issued without a consideration.

2.5. The learned AO/TPO/CIT(A) ought to have appreciated that the issuance of corporate guarantee is a transaction of routine nature, and the AE does not derive any direct benefit from such guarantee in terms of reduced interest rate, or any other benefit.

2.6. Without prejudice to the above, the learned CIT(A) erred in directing the TPO to impute an ad-hoc notional fee of 0.5% on the value of corporate guarantee provided to the AEs.

3.1. The learned CIT(A) had erred in not allowing the Appellant’s claim for foreign tax credit with respect to the dividend income earned from Oman

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as per section 90 of the Act read with Article 25 of the Double Tax Avoidance Agreement between India and Oman (“DTAA”)

3.2. The learned CIT(A) ought to have appreciated that the Appellant had earned dividend income of INR 10,44,46,200/- from its AEs in Oman which was duly offered to tax under section 115BBD of the Act in India

3.3. The learned CIT(A) ought to have appreciated that dividend income was exempt from tax in Oman with a view to promote economic development and foreign investments in Oman Article 8 (bis) of the Omani Tax Laws and clarified and explained vide letter dated 11.12.2000 issued by the Sultanate of Oman, Ministry of Finance, Secretariat General for Taxation, Muscat., hence the Appellant is eligible to claim credit for taxes as per Article 25 of India Oman DTAA.

3.4. The learned CIT(A) ought to have appreciated that the Appellant is eligible to claim credit of taxes deemed to be deducted in Oman on dividend income but for such exemption, against the tax liability for this dividend income in India. 3.5. The learned CIT(A) ought to have followed the Hon’ble Supreme Court in the case of Krishak Bharati Co-operative Ltd [2023] (154 taxmann.com 318) (SC) had upheld the issue in favour of taxpayer, granting tax sparing credit on dividend income received from Oman, which is squarely applicable in the Appellant’s case.

3.6. The learned CIT(A) ought not to have rejected the Appellant’s claim by stating no certificate has been produced from the Omani tax authorities specifically in the Appellant’s case without appreciating the fact that the intention behind exempting the dividend income has already been clarified by Omani Tax Authorities (upheld by the Hon’ble Supreme Court supra) which applies to all the taxpayers in Oman.”

adjudication:

S. No. Ground Nature of Issues No. Transfer Pricing Issues 1. 2 Corporate Guarantee fee Other: 2. 3 Foreign tax credit relating to dividend income earned in Oman

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is the transfer pricing adjustment on account of provision of corporate guarantee to AEs

which was treated as an international transaction by the TPO. Since this issue has

already been adjudicated in Revenue’s appeal ITA No.1836/Chny/2024 (supra), we

uphold the order of the Ld.CIT(A) in holding corporate guarantee as international

transaction and hence no interference called for. As a result, Ground No. 2 raised by

the Assessee stands dismissed.

assessee’s appeal pertains to the claim of foreign tax credit in respect of dividend

income earned by the assessee from its subsidiary in Oman.

from its subsidiary in Oman and offered the same to tax u/s.115 BBD of the Act. There

were no claims made towards foreign tax credit in the return of income since no tax was

actually paid in Oman towards such dividend income on account of the same being

exempt from tax in Oman. Subsequently, during the course of assessment proceedings,

the assessee claimed Foreign Tax Credit (“FTC”) as per Article 25(4) of the double tax

avoidance agreement between India and Oman (“India - Oman DTAA”). The claim of

the Assessee was towards the foreign tax credit in respect of taxes that would have

been otherwise payable on such dividend income earned in Oman under Article 11 of

the India - Oman DTAA. The Assessee’s claim was based upon the decision of the

Hon’ble Delhi High Court in the case of Principal Commissioner of Income-tax v. Krishak

Bharati Cooperative Ltd. [2017] 80 taxmann.com 326 (Delhi), wherein the Hon’ble High

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Court had allowed credit for taxes under Article 25(4) read with Article 11 of the India –

Oman DTAA at the rate of 10 percent under similar circumstances though the assessee

had actually not paid any tax in Oman on account of the dividend income being exempt

from tax. However, the AO did not consider the submissions of the assessee and hence,

no credit was granted.

of appeal seeking foreign tax credit contesting the actions of the AO in not considering

its submissions. The Ld.CIT(A) rejected the claim of the assessee for the reason that it

had not produced a letter / clarification from Oman tax authorities similar to the letter

produced by the tax payer in the judgment of Hon’ble High Court of Delhi in the case of Krishak Bharati Cooperative Ltd., supra.

tribunal. The Ld.AR submitted that the decision of the Hon’ble Delhi High Court (supra)

has been affirmed by the Hon’ble Supreme Court in the case of Principal Commissioner

of Income-tax Vs. Krishak Bharati Co-operative Ltd. [2023] 154 taxmann.com 318,

wherein the Hon’ble Apex court had categorically held that the taxpayer would be

eligible for foreign tax credit in India on the dividend income earned in Oman though no

tax was actually paid in Oman under Article 25(4) read with Article 11 of India - Oman

DTAA.

(Supra) wherein the Hon’ble Apex court held that the letter obtained by the Assessee

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from Omani tax authorities as only a clarificatory communication. Consequently, the

Ld.AR submitted that the letter referred by the ld.CIT(A) obtained from Omani tax

authorities is merely clarificatory and not mandatory to claim credit under Article 25(4)

of India-Oman DTAA. The Ld.AR further submitted that once such letter is issued by

the Omani tax authorities clarifying the intention behind exempting dividend income

earned in Oman as promoting economic development, the benefit of such clarification

extends to all taxpayers, without requiring each taxpayer to obtain a separate certificate

as to the intention behind exempting dividend income on a case-to-case basis.

any burden on the Assessee to furnish a proof as to the reason behind exemption of dividend income in Oman. The Ld.AR also pointed out as to the absence of any

procedures prescribed either under the India - Oman DTAA or under the Omani Tax

law to approach the Omani tax authorities and obtain a clarification/letter to this effect.

Accordingly, the Ld.AR submitted that the revenue cannot import any special condition

onto the Assessee when such a requirement has not been specifically laid down in the

DTAA.

Kemwell (P.) Ltd. V. ACIT [2019] 106 taxmann.com 196 contended that the rationale

for exempting the dividend income by itself is a proof that it was for no other purpose

other than to promote economic development. Therefore, the Ld.AR submitted that

there exists no obligation on the assessee to furnish any proof to establish the intention.

In view of the above facts and judicial precedents cited supra, the Ld.AR pleaded that

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the claim of the Assessee may be allowed.

that DTAA is not intended to promote non taxation in India and Oman.

authorities, relevant articles of India-Oman DTAA and have gone through the judicial

precedents cited before us. The ld.CIT(A) in the impugned order had clearly mentioned

at para 10.9 (page 30), that dividend income earned by the assessee company was

exempt under Omani Tax law. The ld.CIT(A) had rejected the assessee’s contention

only for the reason that assessee had not produced a letter / clarification from Omani tax authorities similar to the letter produced by the taxpayer in the case considered by

the Hon’ble Delhi High Court in the case of M/s.Krishak Bharathi Co-operative Society

Ltd.(supra). On perusal of Article 25 of the India – Oman DTAA, foreign tax credit shall

be allowed with respect to taxes paid in Oman as well as taxes deemed to be paid but

not actually paid in Oman on account of the tax incentives granted under the Omani tax

law.

Delhi High Court in the case reported in 458 ITR 190 (SC) and held that Indian company

is eligible for tax credit under Article 25(4) of India-Oman DTAA though no tax was

actually paid in Oman. The Hon’ble Supreme Court at para 19 of the judgment had

clearly observed that said letter issued by the Oman authority is only a clarification

communication interpreting the provisions contained in Article 8 and Article 8 (bis) of

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the Omani Tax Laws. It was further observed by the Hon’ble Apex Court that the letter

itself has not introduced any new provision in Omani tax laws. We are of the considered

view that once clarification is issued by Omani tax authorities, it applies to all the

taxpayers in respect of dividend income earned in Oman and each taxpayer is not

expected to obtain a clarification / letter as to the intention behind taxability / non-

taxability of dividend income.

the case of Kemwell (P.) Ltd. V. ACIT [2019] 106 taxmann.com 196 wherein it was held

that treaty does not cast any burden on the taxpayer to produce a certificate from the

source country to prove tax exemption has been introduced in the domestic tax law to promote economic development. In the said case, the Tribunal was considering India-

Cyprus DTAA. In the India Cyprus DTAA, Article 25(4) which is identical to the India-

Oman DTAA was being interpreted by the Co-ordinate Bench of the Tribunal. The

Tribunal had extracted the FAA observation confirmed his finding that there was no

necessity for each of the assessee to obtain a certificate from the source country that

exemption under the domestic law was to promote economic development.

direct the assessee to comply with any special requirement where there was none for

the purpose of affording the credit which is explicitly provided under the Treaty or import

‘general’ or ‘special’ conditions when such a requirement has not been specifically laid

down in the DTAA. Therefore, we direct the AO to grant foreign tax credit on taxes

payable in Oman but not paid due to specific exemption in Omani tax law. As a result,

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the above ground No.3 raised by the assessee are allowed.

Order pronounced in the court on 21st November, 2025 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (एस. आर. रघुनाथा) (GEORGE GEORGE K) (S. R. RAGHUNATHA) उपा�य� /VICE PRESIDENT लेखा सद%य/ACCOUNTANT MEMBER चे�नई/Chennai, /दनांक/Dated, the 21st November, 2025 SP आदेश क, *'त1ल2प अ3े2षत/Copy to: 1. अपीलाथ)/Appellant 2. *+यथ)/Respondent 3.आयकर आयु4त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 2वभागीय *'त'न�ध/DR 5. गाड� फाईल/GF