9911796707
TMI Blog2021 (8) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... e countries. He also brought to our attention Article 23 of DTAA between India Tanzania. What is said in the case of India-Korea DTAA is squarely applicable to the facts of the present case. We have already referred to the observations of this Tribunal in the case of Ittiam Systems Pvt. Ltd. [ 2021 (1) TMI 1106 - ITAT BANGALORE] in the earlier paragraphs . Accordingly, relief u/s. 90 to be given on the amount which is lower of the following i.e., Tax paid on income outside India; or payable in India on such doubly taxable income, whichever is lower. Steps to compute the double taxation relief are as follows:- (i) Compute global income i.e., aggregate of Indian income and foreign income; (ii) Compute tax on such global income as per the slab rates applicable as per Indian Income-tax Act; (iii) Compute average rate of tax (i.e., global income divided by amount of tax); (iv) Compute amount by multiplying foreign income with such average rate of tax; and (v) Compute tax paid in foreign country. The amount of relief shall be lower of (iv) (v) i.e., tax paid on income outside India and tax payable under the Indian Income-tax. We direct the AO to grant FTC as above. This ground is partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction under Section 80G in respect of donations made to the extent of evidences available i.e. for ₹ 3,78,000/-. 4.2. The Learned Commissioner (Appeals) is not justified in adjudicating the aforesaid ground. For the above reasons and for such other reasons which may be allowed by the Honourable Members to be urged at the time of hearing, it is prayed that the aforesaid appeal be allowed." 3. The assessee has also raised the following additional grounds of appeal :- "3.4. The lower authorities are not justified in failing to appreciate that the case of the Appellant falls under Section 90(1)(a)(ii) and hence the appellant is eligible for relief in respect of tax paid in Tanzania. 3.5 Without prejudice to the above, the lower authorities are not justified in failing to appreciate that the tax deducted at source in Tanzania is not an income that accrues or arises outside India and therefore, the same cannot be included in the total income of the Appellant." 4. The ld. AR submitted that the additional grounds were inadvertently missed out in the original grounds of appeal and the same may be admitted. The ld. DR has not put serious objection to admission of additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from Tanzania C 10,27,10,579/- Total tax payable in India attributable to Income from Tanzania D=(A/B)*C 3,71,874/- 7. As per the TDS Certificate issued by Lake Cement Ltd., the AO considered the income from Tanzania to be ₹ 10,27,10,579/- and allowed ₹ 3,71,874/- as deduction U/s. 90. The assessee's contention is the AO has considered only the TDS Certificate to arrive at the income and has not considered the project revenue and project profit and loss account. Since the turnover of the company during the year from the contract with Lake Cement Limited is ₹ 63.32 crores, the same is to be considered as income from Tanzania in computation of foreign tax credit. Further, it is submitted that the AO has also disallowed deduction u/s.80G to the extent of ₹ 5,22,750/-. However proof of payment is available to the extent of ₹ 3,78,000/-. 8. On appeal, the CIT(Appeals) observed that the appellant claimed additional credit for foreign tax deducted at source of ₹ 1,71,80,438/-. The AO has given a finding that credit can be given only to total tax payable in India attributable to income from Tanzania. The Article 23 of the DTAA clearly says ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the resident, an amount equal to the tax paid in United States of America, whether directly or by deduction. The conditions mandated in the treaty is that if any "income derived" and "tax paid in United States of America on such income", then tax relief/credit shall be granted in India on tax paid in United States of America. India Japan DTAA 20. Article 23(2) of India Japan DTAA deals with elimination of double taxation. Clause 2(a) is the relevant provision. It reads as under: "2. Double taxation shall be avoided in the case of India as follows : (a) Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Japan, India shall allow as a deduction from the tax on the income of that resident an amount equal to the Japanese tax paid in Japan, whether directly or by deduction. Such deduction in either case shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable, as the case may be, to the income which may be taxed in Japan. Further, where such resident is a company by which surtax is payable in India, the deduction in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (a)(i) is the relevant provision, that reads as under: "Double taxation shall be eliminated as follows: (i) In India: (i) where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Korea, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Korea. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in India. (emphasis supplied) 26. On perusal of the said Article, we find that, in India FTC is available to the taxes paid in Korea and such credit shall not exceed the taxes payable in India on doubly taxed income. Thus there is a difference in FTC available to assessee on taxes paid in USA, Japan and Germany vis-s-vis Korea. 27. In the present facts of the case, respective treaty countries withheld taxes against income from the source state at a particular rate. Article 25 of Indo U.S Treaty, Article 23 (2) of Indo-Japan Treaty and the Indo-Germany Treaty, allows FTC in India to the extent of tax paid in these countrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of this Agreement, may be taxed in India, Tanzania shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in India. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in India. (ii) Where in accordance with any provision of the Agreement, income derived by a resident of Tanzania is exempt from tax in Tanzania, Tanzania may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income." In our opinion, Article 23 of India-Tanzania DTAA is pari materia with Article 23 of India-Korea DTAA. What is said in the case of India-Korea DTAA is squarely applicable to the facts of the present case. We have already referred to the observations of this Tribunal in the case of Ittiam Systems Pvt. Ltd. (supra) in the earlier paragraphs. Accordingly, relief u/s. 90 to be given on the amount which is lower of the following i.e., Tax paid on income outside India; or payable in India on such doubly taxable income, whichever is lower. 12. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
