Taxontips
No Result
View All Result
Wednesday, June 7, 2023
Login/ Register
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Talk to an Expert
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
No Result
View All Result
Taxontips
No Result
View All Result

Foreign Tax Paid Allowed as Deduction Even if Income not Taxable in India – Case law

Income tax Expert by Income tax Expert
March 20, 2021
in Case Laws, Income Tax News
0
Income tax slab rate for F.Y. 2019-20 i.e. A.Y. 2020-21 is as follows:
107
SHARES
1.3k
VIEWS
image_pdfPDFimage_printPrint

Tata Consultancy Services Ltd. v. Additional Commissioner of Income Tax, LTU-1, Mumbai (ITA No. 3262/MUM/2017 Dt. 11.11.2020)

Facts:

  • The assessee, an Indian company, engaged in the business of computer software & management consultancy.
  • It filed its return of income for the relevant assessment year for claiming deductions of tax paid in foreign countries.

Issue 1: Claiming deduction of “State tax” paid in the USA & Canada.

  • Assessee’s contention: State taxes paid in the USA and Canada do not come within the purview of Section 40(a)(ii). The term ‘tax’ as defined under Section 2(43) of the Act, would mean the tax chargeable under the Act. Further, in respect of state taxes paid, it is not eligible for any relief either u/s 90 or 91 of the Act read with the applicable tax treaty. Thus, deduction claimed was not disallowable under Section 40(a)(ii) of the Act. 
  • Revenue’s contention: AO is of opinion that “state tax” paid in foreign countries were not liable to be allowed as deduction u/s 40(a)(ii) even in the assessee’s own case in AY 2005-06, the tribunal while referring to the decision in the case of Tata Sons Ltd. held that state taxes paid overseas cannot be allowed as deduction in the view of provisions of section 40(a)(ii) of the Act.
  • Ruling:

By relying on the decision of the Bombay High Court in Reliance Infrastructure Ltd. v. CIT (390 ITR 271), where the court held that taxes levied overseas which are not eligible for relief either under Section 90 or 91 of the Act, would not come within the purview of Section 40(a)(ii) of the Act.

Therefore, the Tribunal directed the AO to verify whether the State taxes paid by the taxpayer overseas are eligible for any relief under Section 90 of the Act and if the taxpayer is not eligible for the same, the taxpayer’s claim of deduction should be allowed.

Issue 2: Claiming Foreign tax credit in respect of income pertaining to section 10A/10AA where tax paid in the USA.

  • Assessee’s contention: Foreign tax credit should also be provided for taxes paid in overseas jurisdiction, in respect of section 10A/10AA eligible income in India, as per the provisions of respective DTAA.
  • Revenue contentions: AO is of opinion that tax credit will be allowed in respect of those income which was offered to tax abroad as well as subjected to tax in India also.
  • Ruling:

The Tribunal observed with reference to the high court decision in case of Wipro Ltd. (2016) 382 ITR 179 (Karn.) that where the respective tax treaty provides for benefit for foreign tax paid even in respect of income on which the taxpayer has not paid tax in India, still, it would be eligible for tax credit under Section 90 of the Act.

Thus, as per Article 25 of the Indo-USA treaty benefit off foreign tax credit can be availed even in respect of income not subjected to tax in India.

However, India-Canada, Finland treaties do not provide for such benefit unless the income is subjected to tax in both the countries. Therefore, the foreign tax credit would be available to the taxpayer in all cases except the foreign tax paid in Finland and Canada.

 

Conclusion: Thus, if foreign tax credit is not available in India then same can be claimed as expense and further tax credit shall be available in India for foreign tax paid even if income is exempt in India, if DTAA provides so.

To read full judgement CLICK HERE.

image_pdfPDFimage_printPrint
Tags: Foreign tax creditFTC
Previous Post

Important GST update related to GST refund application

Next Post

CBIC issues Press note on officers sending messages to Taxpayers for paying higher tax to meet targets

Related Posts

Income Tax Return
Income Tax News

ITR 2 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips

June 6, 2023
Last opportunity to file Income tax return for F.Y. 2018-19 | Belated return u/s 139(4) of the Income tax Act
Income Tax News

Condonation of delay in filing refund claim and claim of carry forward of losses under Section 119(2)(b) of the I.T. Act

June 5, 2023
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

Due date for filing SFT extended from 31.05.2023 for FY 2022-23?

June 1, 2023
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

E-appeal scheme, 2023 announced by CBDT, JCIT(A) will now hear appeal [Read notification]

May 31, 2023
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

Limit of exempt income for leave encashment for non-govt employees increased to Rs. 25 lakh [Read notification]

May 30, 2023
ICAI has announced a new MBA programme for Diploma in Management and Business Finance
Income Tax News

ANNUAL FEE CIRCULAR 2023-24 by ICAI for it’s members

May 29, 2023
Next Post
LUT of FY 2019-20 to be eligible for FY 2020-21 upto 30.06.2020

CBIC issues Press note on officers sending messages to Taxpayers for paying higher tax to meet targets

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Google Custom search

Recent Posts

  • U.S. Corporations Owned by Foreign/ Indian Shareholders – Comprehensive Tax Implications and Reporting Requirements
  • ITR 2 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips
  • Condonation of delay in filing refund claim and claim of carry forward of losses under Section 119(2)(b) of the I.T. Act
  • ₹1,57,090 crore gross GST revenue collected for May 2023; clocks 12% Year-on-Year growth
  • Due date for filing SFT extended from 31.05.2023 for FY 2022-23?

Recent Comments

  • Notification under PMLA by Ministry of Finance which could affect CA, CS and CMA - Taxontips on CA, CS and CMA now under PMLA. KYC of clients required
  • ITR 4 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips – Taxontips on Businessman with turnover below 1 crore and having profit below 8% need to compulsorily get books of accounts audited: Let’s find out
  • Can a person earning income from speculative business transaction file return u/s 44AD of Income tax act - Taxontips on How to calculate turnover in case of intra day and future and option trading for Income Tax purpose?
  • Extension of last date for updation of Member’s Profile with GSTIN at Self Service Portal – Till 23rd April, 2023 - Taxontips on Updation of Member’s Profile at Self Service Portal with GSTIN to get GST credit till 15.04.2023
  • Akshay Kadam on New error faced in the new Income tax e-filing portal related to log-in of an assessee | E-filing 2.0

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Browse Topics by Date

June 2023
M T W T F S S
 1234
567891011
12131415161718
19202122232425
2627282930  
« May    
  • GSTR 9/ 9C extended : AGAIN

    GSTR 9/ 9C due date to be extended to 31.10.2020 | E-invoicing will be voluntary in the beginning

    6456 shares
    Share 2582 Tweet 1614
  • How to pay Membership and COP fees of ICAI for 2020-21 |

    6344 shares
    Share 2538 Tweet 1586
  • Code/ Nature of payment 6CR updated by NSDL in challan 281 for paying TCS on sale of goods

    5682 shares
    Share 2273 Tweet 1421
  • Are all the due dates of tax audit and Income tax return for FY 2019-20 extended to 31.03.2021 by the bill presented in Lok sabha Dt. 18.09.2020

    4771 shares
    Share 1908 Tweet 1193
  • SFT transaction mentioned in Form 26AS | What does it mean? | Who reports it? | SFT codes transaction type

    3991 shares
    Share 1596 Tweet 998

Recent Notification

US tax

U.S. Corporations Owned by Foreign/ Indian Shareholders – Comprehensive Tax Implications and Reporting Requirements

June 7, 2023
Income Tax Return

ITR 2 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips

June 6, 2023

RSS Taxontips

  • U.S. Corporations Owned by Foreign/ Indian Shareholders – Comprehensive Tax Implications and Reporting Requirements
  • ITR 2 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips
  • Condonation of delay in filing refund claim and claim of carry forward of losses under Section 119(2)(b) of the I.T. Act
  • ₹1,57,090 crore gross GST revenue collected for May 2023; clocks 12% Year-on-Year growth
  • Due date for filing SFT extended from 31.05.2023 for FY 2022-23?
  • E-appeal scheme, 2023 announced by CBDT, JCIT(A) will now hear appeal [Read notification]
  • Limit of exempt income for leave encashment for non-govt employees increased to Rs. 25 lakh [Read notification]
  • ANNUAL FEE CIRCULAR 2023-24 by ICAI for it’s members
  • Instructions for conducting scrutiny of returns for FY 2019-20 onwards under GST [Read instructions]
  • Extension in time limit for filing Form 10A, 10AB, 10BD, 10 etc. in relation to trust under Income tax act

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Site menu

  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Taxontips

TaxOnTips provides you all tax related solutions in easy way and update you with its regular updates & notifications Visit us for details.
We are based in Jaipur, India

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

No Result
View All Result
  • Login/Signup
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • About us
  • Contact us
  • Ask an expert/ Talk to an expert
  • Q & A
  • Privacy Policy
  • Terms of use

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

Book Phone consultation with expert

Sitting home or at your office and don't have time to visit CA's office or don't know where to consult CA. Book your consultation with an expert practicing Chartered Accountant and get your query solved.

Book a phone consultation for 30 minutes with our expert at a very basic cost.

Book consultation

No thanks, I'm not interested!