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Facts
The assessee, claiming to be a Non-Resident Indian (NRI), inadvertently declared himself as a resident in his income tax return and claimed foreign tax credit. The Assessing Officer and CIT(A) denied this claim, partly due to the unclear duration of stay from passport stamps and the non-filing of Form 67.
Held
The Tribunal found that the assessee's residential status was not properly verified by the authorities below. The ITAT set aside the CIT(A)'s order and remanded the matter to the Assessing Officer to verify the assessee's residential status.
Key Issues
Whether the assessee's residential status as NRI was correctly determined and whether foreign tax credit is allowable without Form 67 when the assessee is a non-resident.
Sections Cited
143(1), 90, 6
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Income Tax Appellate Tribunal, Hyderabad ‘ SM-A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
Per Vijay Pal Rao, Vice President
This appeal filed by the assessee is directed against the order dated, 19/11/2024 of the learned CIT(A)/ADDL/ JCIT(A)-2, Gurgaon, for the A.Y.2021-22.
The assessee has raised the following grounds of appeal:
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The learned AR of the assessee has submitted that the assessee is a Non-Resident Indian (NRI) and, filed the return of income on 18/12/2021 inadvertently declaring his residential
ITA 108 of 2025 Srikar Perala status as resident of India declaring total income of Rs.11,42,000/-. The return of income was processed by the CPC, vide order dated, 30/05/2022 raising a demand of Rs.1,45,530/-.
The assessee challenged the order of the CPC before the learned CIT (A) and submitted that, the assessee is an NRI and inadvertently declared his residential status in the return of income. In support of his contention, the assessee relied upon the details of Passport of the assessee showing the duration of stay of assessee in India. Further, the assessee has claimed that, the foreign tax paid by the assessee on the salary income received from outside India be allowed as credit u/s 90 of the I.T. Act, 1961. The assessee filed a revised computation before the learned CIT (A) for claiming the foreign tax credit. The learned CIT (A) did not accept this contention of the assessee and also denied the claim of foreign tax credit for want of filing of Form 67.
Before the Tribunal, the learned AR of the assessee has submitted that the learned CIT (A) has not disputed the fact that the assessee has received a salary income of Rs.9,12,892/- from outside India i.e. Indonesia and tax has already been paid on the said income in Indonesia. He has further submitted that the assessee also produced the Tax ITR filed in Indonesia to show that, the tax was paid on the salary received outside India and therefore, the credit on account of foreign tax paid by the assessee is allowable as per section 90 of the I.T. Act, 1961. The learned AR has further submitted that, once the assessee is a non-resident and inadvertently mentioned the status as resident, cannot be a Page 4 of 11
ITA 108 of 2025 Srikar Perala reason for denying the claim of foreign tax credit. Thus, the learned AR has submitted that the actual status of the assessee is NRI and therefore, the requirement of filing of Form 67 is not a condition for claiming the foreign tax credit. He has referred to the passport of the assessee to show the immigration details showing the visit of the assessee in India during the financial year 2020-21 and submitted that, the assessee has arrived in India during the previous year on 23/03/2021 and therefore, the stay of the assessee is only 9 days during the said financial year. Thus, the learned AR has submitted that the assessee was not a resident in India as per the provisions of section 6 of the I.T. Act, 1961 as the stay in India was only for 9 days, whereas the condition for considering the assessee as resident in India provides that the stay in India should be for 182 days or more during the previous year i.e. 1/4/2020 to 31/03/2021 or stay in India for 60 days or more during the previous year and 365 days or more during the preceding 4 years i.e. 2016-17 to 2019-20. Thus, the learned AR has submitted that when the assessee has not stayed in India for the minimum days during the previous year relevant to the A.Y under consideration, then the status of the assessee is NRI for the year under consideration and there is no requirement of filing Form 67 for claiming the foreign tax credit. Thus, he has submitted that the claim of the assessee for foreign tax credit be allowed.
On the other hand, the learned DR has submitted that the learned CIT (A) has given a finding that, it is not clear from the passport copy of the assessee to ascertain the duration of stay in Page 5 of 11
ITA 108 of 2025 Srikar Perala India for accepting the status of the assessee as NRI as per the provisions of section 6 of the I.T. Act, 1961 and therefore, the claim of the assessee as NRI cannot be accepted. The learned DR further submitted that, since the assessee has not filed the Form 67, which is a mandatory condition for claiming the foreign tax credit, therefore, the claim of the assessee is not allowable.
We have considered the rival submission as well as relevant material available on record. The assessee in the return of income has shown the status as resident by marking a tick in column of staying for 180 days or more during the previous year. It is pertinent to note that the assessee has claimed foreign tax credit in the return of income to the tune of Rs.1,52,245/- u/s 90 of the I.T. Act, 1961. However, the CPC while processing the return of income has denied the foreign tax credit and raised the demand of Rs.1,52,245/-. The assessee challenged the order of the CPC before the learned CIT (A) and explained the status of the assessee was inadvertently mentioned in the return of income as resident, whereas the actual status of the assessee is NRI for the year under consideration. In support of this contention, the assessee produced the copy of the passport showing the details of inward and outward details of visit to India and from India. The learned CIT (A) has declined to accept the status of the assessee as Non-Resident and also denied the claim of the foreign tax credit in para 6 as under:
ITA 108 of 2025 Srikar Perala
Thus, it is clear that the assessee has brought to the notice of the learned CIT (A) that the actual status of the assessee is a Non-Resident and the assessee stayed in India only for 9 days during the previous year i.e. 1/4/2020 to 31/03/2021. The assessee produced the copy of the passport in support of this claim which is placed at page No.18 & 19 of the paper book as under:
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Prima facie, it appears that during the previous year i.e. from 1/4/2020 to 31/03/2021, the assessee has visited India only once and arrived on 23/03/2021 at New Delhi. Thus, only in the month of March, 2021 the assessee stayed in India for 9 days. The learned CIT (A) has given the reason that, from the passport copy, it is not clear regarding the duration of stay in India. If it was so, then the learned CIT (A) ought to have got the same verified by calling a remand report from the Assessing Officer. Instead of getting the correct facts verified and ascertained, the learned CIT (A) has chosen to give the reasons of unclarity of duration of stay of the assessee in India and denied the status of the assessee as non-resident. It is pertinent to note that if the status of the assessee is non-resident during the year under Page 9 of 11
ITA 108 of 2025 Srikar Perala consideration, then there is no requirement of filing of Form 67 to claim foreign tax credit. The learned CIT (A) has not disputed the fact that the assessee has received a salary income of Rs.9,12,892/- during the year under consideration from outside India i.e. Indonesia on which the tax was paid in Indonesia for a sum of Rs.1,52,245/- which was claimed by the assessee as foreign tax credit in the return of income. All these facts, prima facie, show that the assessee has inadvertently shown his residential status as resident in the return of income. However, since this aspect of the assessee’s status has not been verified and examined by any of the authorities below, therefore, in the facts and circumstances of the case and in the interest of justice, we are of the considered opinion that, the residential status of the assessee is required to be verified at the level of the Assessing Officer. Accordingly, the impugned order of the learned CIT (A) is set aside and the matter is remanded to the record of the Assessing Officer for verifying and ascertaining the residential status of the assessee for the year under consideration. In case the assessee is found to be non-resident during the year under consideration, then the claim of the assessee for foreign tax credit be allowed. Needless to say, the assessee shall be given appropriate opportunity of hearing before passing the fresh order.
ITA 108 of 2025 Srikar Perala
In the result, appeal filed by the assessee is allowed for statistical purposes.