M/S. WIPRO LIMITED,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-7(1)(2), BANGALORE

ITA 492/BANG/2017Status: DisposedITAT Bangalore13 June 2024AY 2012-1343 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, following the binding decision of the Hon'ble High Court of Karnataka in the assessee's own case (ITA No.82 to 87/2023 dated 9.1.2024), set aside the previous order of the ITAT. The High Court had remitted the issue for reconsideration. The Tribunal noted that the High Court accepted all contentions of the assessee. Specifically, the Tribunal referred to a co-ordinate bench's decision for AY 2015-16, which in turn relied on the Hon'ble High Court of Karnataka's detailed examination of the foreign tax credit issue. The High Court's reasoning, as extracted in the judgment, clarified that Section 90 and Section 91 provide for relief from double taxation. The Tribunal concluded that to the extent foreign tax for which credit has not been granted under Section 90 read with DTAA or Section 91, the claim for such amount should be allowed. The Tribunal set aside the Assessing Officer's order on this issue and directed the AO to allow the foreign tax credit claimed by the assessee in terms of the High Court's decision. The issue of allowing the difference as business expenditure was also considered, with the assessee arguing it should be deductible under Section 37(1) or as a loss under Section 28, as it's not covered by Section 40(a)(ii). The Tribunal's order for AY 2015-16, which was referred to, also allowed foreign tax credit. The present appeals were listed for fresh hearing to dispose of the issue once again.

What were the facts?

The assessee, M/s. Wipro Limited, filed appeals before the Income Tax Appellate Tribunal (ITAT) for assessment years 2009-10 to 2014-15. The appeals concerned the allowability of deduction under Section 37(1) for income tax paid by the assessee outside India on its foreign profits, for which credit was not granted under Section 90 read with DTAA or Section 91 of the Income Tax Act, 1961. The ITAT had previously disallowed this claim. The assessee appealed to the Hon'ble Jurisdictional High Court, which, by order dated January 9, 2024, remitted the issue back to the ITAT for reconsideration. The High Court noted that the Bombay High Court, in a similar case (Reliance Infrastructure Ltd. Vs. Commissioner of Income Tax), had granted relief, and this order was accepted by the Department and followed by the ITAT in the assessee's own case for subsequent assessment years. The revenue did not dispute the submission for reconsideration.

What were the issues?

1. Whether the portion of foreign income tax paid by the assessee, for which credit has not been granted under Section 90 read with the applicable DTAA or Section 91 of the Income Tax Act, 1961, is allowable as a business expenditure under Section 37(1) of the Act. Assessee's Contentions: - The foreign tax paid, if not fully allowed as credit, should be allowed as business expenditure under Section 37(1) or as a loss under Section 28. - Such unrelieved foreign taxes are not covered by the restriction in Section 40(a)(ii). - The Bombay High Court, in Reliance Infrastructure Ltd. Vs. Commissioner of Income Tax, granted similar relief, which was accepted by the Department. - The ITAT followed this precedent in the assessee's own case for assessment years 2015-16 to 2017-18. - The assessee relied on the decision of the Hon'ble High Court of Karnataka in its own case for AY 2009-10 to 2014-15. Revenue's Contentions: - The revenue, through its representative, did not dispute the submission for reconsideration of the matter by the ITAT and submitted that all questions may be kept open for the revenue to urge.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 90,Section 91,Section 40(a)(ii),Section 28

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Cases cited in this judgment(4)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

IT(TP)A No.99/Bang/2014, IT(TP)A NO.398/Bang/2015, IT(TP)A No.222/Bang/2016, IT(TP)A Nos.492 & 2851/Bamg/2017 & IT(TP)A No.3115 of 2018 M/s. Wipro Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER IT(TP)A No.99/Bang/2014

Assessment Year: 2009-10 M/s. Wipro Limited Doddakannelli Sarjapur Road Bangalore 560 025 Vs. Addl. CIT, Range-12 Bangalore PAN NO : AAACW0387R APPELLANT RESPONDENT IT(TP)A No.398/Bang/2015

Assessment Year: 2010-11 M/s. Wipro Limited Circle-7(1)(2) Bangalore PAN NO: AAACW0387R APPELLANT RESPONDENT IT(TP)A No.222/Bang/2016, IT(TP)A Nos.492 & 2851/Bang/2017

Assessment Years: 2011-12, 2012-13 & 2013-14 M/s. Wipro Limited Circle-7(1)(2) Bangalore RESPONDENT PAN NO : AAACW0387R APPELLANT IT(TP)A No.3115/Bang/2018

Assessment Year: 2014-15 M/s. Wipro Limited Circle-7(1)(2) Bangalore RESPONDENT Appellant by : Sri Dhyan Chinnappa, Sr. A.R. and Sri Sandeep Huilgol, A.R. Respo

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