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2024 (7) TMI 1092 - HC - Income TaxValidity of order passed u/s 154 - benefit of Foreign Tax Credit u/s 90/90A of the Income Tax Act read with Article 24 of India-Australia DTAA in respect of taxes paid by the Australian branch denied - HELD THAT - On examining the company tax return and the activity statements, it appears prima facie that the petitioner has remitted taxes through the Australian branch. It is clear that Foreign Tax Credit in respect thereof was claimed by the petitioner by filing Form 67 with relevant annexures. On examining the intimation u/s 143(1) and the impugned rectification order, Foreign Tax Credit was computed by the assessing officer and such computation tallies with the Foreign Tax Credit claim of the assessee. In spite of accepting the computation of the tax payer, the tax credit relief was denied. It is not possible to discern the reasons for such denial, but these facts and circumstances undoubtedly warrant reconsideration. The impugned rectification order is set aside and the matter is remanded for reconsideration in so far as the Foreign Tax Credit claim is concerned. If there are any dues after taking into consideration such Foreign Tax Credit claim and interest liability arising therefrom, the petitioner shall discharge the same.
Issues: Challenge to order under Section 154 of the Income Tax Act regarding Foreign Tax Credit claim denial.
In this case, the petitioner challenged an order under Section 154 of the Income Tax Act, 1961, dated 27.05.2024, which denied the Foreign Tax Credit claim for the assessment year 2022-2023. The petitioner had initially filed the original return of income on 29.11.2022, followed by a revised return on 29.12.2022, claiming the benefit of Foreign Tax Credit under Section 90/90A of the Income Tax Act. The petitioner had uploaded necessary documents to support the claim, including Form 67, business activity statements filed with the Australian Tax Office, and the company tax return filed in Australia. Despite the claim, a demand of Rs. 1,40,47,430/- was made after processing the return, with the Foreign Tax Credit being denied. Subsequent rectification petitions were also rejected, leading to the filing of the writ petition challenging the denial of the Foreign Tax Credit claim. The petitioner's counsel argued that the tax liability in Australia was duly discharged, and the Foreign Tax Credit claim was made due to differential tax rates in India and Australia. He highlighted discrepancies where the intimation under Section 143(1) computed the Foreign Tax Credit but denied it in the same document and in the subsequent rectification order. The senior standing counsel for the respondents agreed that the matter should be remanded for reconsideration regarding the Foreign Tax Credit claim. Upon examination, the court found that the petitioner had indeed remitted taxes through the Australian branch, supporting the Foreign Tax Credit claim with relevant documents. The assessing officer's computation of the Foreign Tax Credit matched the claim made by the assessee, yet the relief was denied without clear reasons. The court concluded that the denial was unjustified and ordered the impugned rectification order to be set aside. The matter was remanded for reconsideration specifically regarding the Foreign Tax Credit claim. The Central Processing Centre was directed to issue a fresh order within three months after reconsideration. The writ petition was disposed of without costs, and connected miscellaneous petitions were closed.
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