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Facts
The assessee filed a revised computation of income for AY 2013-14, including additional salary from USA and claiming foreign tax credit (FTC) of Rs. 98,852/-. The Assessing Officer (AO) denied this FTC and incorrectly made a double addition of Rs. 29,37,294/-, which had already been offered in the original return. The National Faceless Appeal Centre (NFAC) upheld the AO's order.
Held
The Tribunal held that the assessee is entitled to the foreign tax credit of Rs. 98,852/- as the tax was paid in the USA and there was no dispute by the revenue. It directed the AO to delete the double addition of Rs. 29,37,294/-, concluding that the AO's action reflected a complete non-application of mind.
Key Issues
Whether the lower authorities were justified in denying foreign tax credit for additional income offered in a revised computation and making a double addition of income already declared.
Sections Cited
Section 143(3), Section 144, Section 90, Section 91
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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI VIMAL KUMAR
PER M. BALAGANESH, A. M.: The appeal in for AY 2013-14, arises out of 1. the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2022-23/1046001421(1) dated 27.09.2022 against the order of assessment passed u/s 143(3) r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.02.2016 by the Assessing Officer, DCIT, Circle-70(1), New Delhi (hereinafter referred to as ‘ld. AO’).
Though the assessee has raised several grounds, the only effective issue to be decided in this appeal is with regard to non denial of grant of foreign tax credit of Rs. 98,852/- by the lower authorities.
We have heard the rival submissions and perused the material available on record. The assessee is an individual deriving income from salary, income from house property, income from capital gains and other sources. The return of income for AY 2013-14 was filed by the assessee on 28.07.2013 declaring total income of Rs. 41,56,670/-. During the course of scrutiny assessment proceedings, the assessee filed a revised computation of income before the ld AO offering further income which he had earned in USA towards salary income. This additional income was Rs. 37,52,255/-. But the assessee offered Rs. 29,37,294/- in the original return and accordingly came forward to offer the differential sum of Rs. 8,14,961/- in the revised computation of income. The assessee claimed foreign tax credit of Rs. 4,03,420/- in respect of taxes paid in USA for the salary income which was allowed by the AO in the scrutiny assessment. The assessee made a further claim of foreign tax credit of Rs. 98,852/- in the revised computation of income for the differential sum of Rs. 8,14,961/- offered by it in the revised computation. The ld AO however very strangely proceeded to add the salary income earned from HSBC USA by the assessee in sum of Rs. 37,72,946/- in the original return of income difference thereby resulting into double taxation. The ld AO however having taxed the additional income offered by the assessee in the revised computation denied foreign tax credit of Rs. 98,852/- while completing the assessment. This action was upheld by the National Faceless Appeal Centre (NFAC) just by reiterating the observation of the AO.
We find that the revised computation filed by the assessee as under:-
From the aforesaid computation it could be seen that only an additional income of Rs. 8,14,961/- towards salary from HSBC USA was offered in the revised computation during the course of assessment proceedings. A sum of Rs. 29,37,294/- was already offered by the assessee in the original return of income. Hence, the lower authorities ought not to have taxed the very same sum of Rs. 29,37,294/- again in the assessment. In this regard, the action of the ld AO is without any basis and reflects complete non-application of mind. Further, the assessee for the additional income offered in the revised computation had claimed foreign tax credit of Rs. 98,852/- which would be obviously allowable to the assessee. It is not the case of the revenue that the assessee had not paid the tax to the tune of Rs. 98,852/- in USA. Hence, we hold that the assessee would be entitled for foreign tax credit of Rs. 98,852/-. We also direct the ld AO to delete the addition made in the sum of Rs. 29,37,294/- reflecting the double addition as explained supra. Accordingly, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 10/10/2024.