2023 (2) TMI 628 - AT - Income Tax

Relief u/s. 90 - assessee is an individual citizen of India and for A.Y. 2018-19 was on deputation to Netherlands by his employer - assessee revised return of income assessee declared the salary received in Netherlands and claimed relief u/s 90 - reason why the foreign tax credit was denied to the assessee is that the assessee submitted the certificate of his employer and without submitting any detail of the payment of taxes in Netherlands - HELD THAT - Claim of the assessee is now supported by the letter by the Dutch Tax authorities. The assessee has submitted the English translation. As find that the employer has deducted whatever tax has been held to be correct by that authority. Even otherwise, the form no.67 of furnished by the assessee also clearly shows what is the amount of salary received by him from Netherlands and what is the amount of withholding tax paid by him through his employers in Netherlands. Therefore, there is no doubt that assessee has paid tax in Netherlands and assessee is entitled to deduction of such tax u/s 90 of the income tax Act. The only dispute is with respect to the quantum of deduction. The assessee has clearly submitted that now there is an assessment by Dutch tax authorities and correct tax paid therein is available. In view of this, we direct the AO to grant credit of Dutch tax paid by the assessee after proper verification and obtaining necessary information from the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Consideration of revised statement of total income.
2. Denial of relief under section 90 of the Act.
3. Non-consideration of revised Form 67.
4. General grounds of appeal.

Issue 1: Consideration of revised statement of total income
The appeal was filed against the order dismissing the appeal against the non-granting of foreign tax credit. The appellant contended that the revised statement of total income should have been considered by the authorities. The appellant argued that the revision was due to the subsequent filing of an income tax return in the Netherlands for the calendar year 2017. It was emphasized that the powers of the CIT (A) are co-terminus with that of the income-tax officer, and therefore, the CIT (A) should have considered the request to compute the total income and income-tax liability based on the revised statement.

Issue 2: Denial of relief under section 90 of the Act
The appellant challenged the denial of relief under section 90 of the Act by the CIT (A). The grounds of appeal highlighted that the relief was denied based on the lack of evidence of tax paid or deducted, as required by Rule 128 of the Income-tax Rules 1962. The appellant argued that Form 67 was filed along with a declaration from the employer certifying the nature of income and the tax deducted, in compliance with the relevant rules. It was contended that the submission of Form 67 is a procedural requirement, and the appellant should be eligible to claim relief based on the substantive provisions of the Act and the Double Taxation Avoidance Agreement (DTAA).

Issue 3: Non-consideration of revised Form 67
The appellant also raised concerns regarding the non-consideration of the revised Form 67 in granting relief under section 90 of the Act. The appellant argued that the revised statement of total income submitted on 18 February 2021 should have been taken into account for granting relief. The appellant sought an opportunity to remedy any defects in the submission of Form 67 and emphasized compliance with procedural requirements.

Issue 4: General grounds of appeal
The general grounds of appeal reiterated that each ground was without prejudice to the other, emphasizing the comprehensive nature of the appellant's challenge to the denial of foreign tax credit and relief under section 90 of the Act.

In the final judgment, the Tribunal allowed the appeal, directing the Assessing Officer to grant credit for the Dutch tax paid by the assessee after proper verification. The Tribunal noted that the appellant had provided supporting documents, including a letter from the Dutch Tax authorities and the employer's certificate regarding tax payments in the Netherlands. The Tribunal emphasized that the appellant had fulfilled the requirements for claiming the tax credit under Section 90 of the Income-tax Act, and the only dispute was regarding the quantum of deduction. Consequently, the appeal was allowed for statistical purposes, with the direction to grant credit for the Dutch tax paid by the assessee.