2022 (2) TMI 103 - AT - Income Tax

Credit for Foreign Tax after verification of the claim in contravention to section 251(1) - HELD THAT - Tribunal, relying on certain decisions, accepted the assessee's claim of granting tax credit in respect of the interest income that was shown by the assessee in the year under consideration. Tribunal accepted the assessee's contention in the proceedings arising out of the order passed u/s. 143(3), the instant appeal on the very same issue, flowing from the order passed u/s.154, has virtually become infructuous. Respectfully following the order passed by the Tribunal for the same year allowing Foreign Tax credit in respect of interest income offered during the year under consideration, we uphold the impugned order on this score. The facts for the assessment year 2012-13 are admittedly mutatis mutandis similar to the immediately preceding year. For this year also, the AO did not allow credit for Tax credit on interest income credited by the foreign entity. The assessee moved application u/s. 154 and the instant proceedings arose out of such application. The assessee assailed the order u/s. 143(3) before the higher authorities. Tribunal accepted the assessee's contention and the ld. CIT(A) in the impugned order has followed the view point of the Tribunal in allowing the assessee's claim. Since the facts and circumstances of the instant appeal are similar to those for the assessment year 2011-12, following the view taken hereinabove, we uphold the impugned order.

Summary

Issues:
Appeals by Revenue against CIT(A) direction to allow credit for Foreign Tax under section 251(1) of the Act for assessment years 2011-12 and 2012-13.

Analysis:
1. Assessment Year 2011-12:
- The appellant provided unsecured loans to its subsidiary, Emcure Pharmaceuticals, USA Inc., with tax deducted at the source by the foreign company on interest income.
- The AO initially disallowed credit for TDS in the assessment under section 143(3).
- The appellant filed a rectification application under section 154 to claim TDS credit, which the AO rejected.
- The CIT(A) allowed the appellant's claim, leading to the Revenue's appeal.
- The Tribunal, in a previous order, upheld the appellant's claim for tax credit on interest income for the same year.
- The current appeal, arising from the order under section 154, became unnecessary due to the Tribunal's previous decision, resulting in the impugned order being upheld.

2. Assessment Year 2012-13:
- The circumstances for this year mirrored those of the previous year, with the AO again denying tax credit on interest income from the foreign entity.
- The appellant challenged the order under section 143(3), leading to the Tribunal accepting the claim.
- The CIT(A) followed the Tribunal's decision and allowed the appellant's claim for tax credit.
- Given the similarities with the previous year's case, the impugned order was upheld for this assessment year as well.

In conclusion, both appeals by the Revenue were dismissed, with the Tribunal upholding the CIT(A)'s decision to allow credit for Foreign Tax on interest income for both assessment years 2011-12 and 2012-13, based on the previous Tribunal order for the same issue.