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2020 (11) TMI 178 - AT - Income TaxForeign tax credit claimed under Article 24 of India- UK DTAA read with Section 90 - assessee who is a resident of India and has derived from salary which has suffered tax in the UK on account of his employment exercise in UK - Number of days assessee s stay in the United Kingdom - eligibility of exemption from tax in UK under Article 16(2) of the India-UK DTAA - Whether CIT(A) has grossly erred in facts in stating that the aggregate stay in UK for the said previous year is less than 183 days disregarding the fact that the Appellant stayed in UK for 241 days? - HELD THAT - It is pertinent to note that the assessee was working in UK for more than 183 days which was never disputed by the Revenue at any point of time. Besides this the Revenue authorities are very well aware that the assessee has paid taxes in UK for the remuneration received in UK. The assessee is a resident of India. Article 16(2) does not apply in the present scenario. In-fact, if we go through the provisions of Section 90(2) of the Income Tax Act, 1961 and Article 24 of the India-UK DTAA, then the claim made by the assessee is valid and, therefore, the Assessing Officer as well as the CIT(A) was not right in making and sustaining the addition in that respect. Hence, appeal of the assessee is allowed.
Issues:
1. Disallowance of foreign tax credit claimed under India-UK DTAA 2. Discrepancy in the number of days stayed in the UK 3. Applicability of Article 16(2) of India-UK DTAA 4. Levying of interest under Section 234B and Section 234C 5. Failure to reconcile double taxation of income in India and UK Analysis: 1. The appellant contested the disallowance of foreign tax credit under India-UK DTAA. The appellant argued that as a resident of India with income taxed in the UK, credit should be allowed against Indian taxes. The provisions of Section 90(2) of the Income Tax Act and Article 24 of the India-UK DTAA support this claim. The appellant provided necessary documentation for the claim, asserting that the Assessing Officer failed to consider the relevant provisions during assessment and did not provide a fair opportunity to substantiate the claim. The Tribunal found in favor of the appellant, holding that the provisions of the India-UK DTAA were indeed applicable, and the disallowance was incorrect. 2. The discrepancy in the number of days stayed in the UK was a point of contention. The appellant stated a stay of 241 days, while the authorities claimed it was less than 183 days. The Tribunal noted that the appellant's stay exceeding 183 days was undisputed by the Revenue. As the appellant was a resident of India and had paid taxes in the UK, Article 16(2) of the India-UK DTAA did not apply. The Tribunal, after considering Section 90(2) of the Income Tax Act and Article 24 of the India-UK DTAA, ruled in favor of the appellant, highlighting the incorrectness of the authorities' position. 3. The Assessing Officer and CIT(A) had levied interest under Section 234B and Section 234C on the additions made to the appellant's tax liability. The Tribunal, upon reviewing the case, found in favor of the appellant and allowed the appeal. The Tribunal's decision was based on the incorrect application of provisions by the authorities and the appellant's compliance with the relevant tax laws and treaties. 4. The failure to reconcile double taxation of income in India and the UK was another issue raised. The appellant argued that the Assessing Officer and CIT(A) disregarded the reconciliation, computation of foreign tax credit, and proof of UK taxes paid during the appellate proceedings. The Tribunal, after considering all aspects, allowed the appeal, emphasizing the importance of adhering to the provisions of the India-UK DTAA and providing a fair opportunity for the appellant to present their case effectively.
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