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TMI Blog2023 (11) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... claim during the course of assessment proceedings. Moreover, the claim does not impact the income of the assessee but only relates to giving credit for additional taxes paid on the income already declared. Once credit for foreign withholding tax has been allowed @ 10%, the subsequent revisional rate of tax is also required to be allowed. Considering all we are of the opinion that the CIT(A) has rightly directed the Assessing Officer to allow the claim of additional withholding tax paid by the assessee. Thus, we find no reason to interfere with the order passed by the ld. CIT(A) and accordingly, the appeal filed by the Revenue is dismissed. - Shri V. Durga Rao, Judicial Member And Shri Manoj Kumar Aggarwal, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory in nature and not directory. 3. For these and such other grounds that may be adduced at the time of hearing it is prayed that the order of the Ld.CIT(A), NFAC may be reversed and that of the Assessing Officer restored. 2. Brief facts of the case are that the assessee, M/s. Ramco Systems Limited is engaged in the business of software developing and e-filed its return of income for the assessment year 2016-17 on 30.11.2016 admitting current year loss of ₹.5,48,443/- and revised return of income on 29.03.2018 admitting income of ₹ NIL. The case of the assessee was selected for complete scrutiny under CASS and notice under section 143(2) of the Income Tax Act, 1961 [ Act in short] dated 10.08.2018 was served on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 10% of the royalty paid. Subsequently, the Australian company redetermined the withholding rate to be 15% and deducted a further sum of ₹.69,63,628/- being additional tax deduction at 5% of the royalty paid. This additional tax deduction was made on 25.06.2019, much after the due date for filing the revised return of income for the AY 2016-17 for the assessee company had expired. Therefore, the assessee made the additional claim for withholding tax amounting to ₹.69,63,628/- during the scrutiny assessment proceedings. However, the Assessing Officer did not give any credit for the additional withholding tax of ₹.69,63,628/-. After considering the submissions of the assessee and by referring various case law, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t allowed the claim of additional tax deduction of 5% being ₹.69,63,628/-. On appeal, after considering the submissions of the assessee, the ld. CIT(A) allowed the claim of deduction by observing as under: 6. Decision 6.1 I have carefully considered the grounds of appeal, the statement of facts, the submissions of the appellant and the order appealed against. The only issue in this appeal is against non-grant of Foreign Tax Credit of Rs. 69,63,628/- All the grounds of appeal relate to this issue only and are disposed of together in the subsequent paragraphs. 6.2 As discussed in detail at Para 4,1 above, the appellant had received royalty income from its Australian subsidiary, Ramco Systems Australia Pty Ltd, which had in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thholding tax (@5%) amounting to Rs. 69,63,628/- The AO has not given any reasons in the assessment order for not allowing this additional claim made during the course of the assessment proceedings. The appellant had a valid reason for making the claim during the assessment proceedings as the additional deduction was made only in June 2019, much after the due date for filing a revised return u/s 139(5) for AY 2016-17 had expired. It is true that the claim was not made by way of a return of income, but this claim was duly made during the ongoing assessment proceedings. Further, the claim does not impact the income of the appellant but only relates to giving credit for additional taxes paid on the income already declared. The revised Form 67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the requisite Form 67 and the certificate of foreign withholding tax by the deductor were duly filed before the AO during the assessment proceedings. In view of the above discussion, it is hereby held that the appellant is entitled to claim credit u/s 90 for the additional component of foreign withholding tax of Rs. 69,63,628/- The AO is directed to allow the credit for Rs. 69,63,628/- Grounds No. 1 to 6 are, therefore, treated as allowed. 6.1 The question of foreign tax credit for withholding tax on royalty income is not in dispute. In the return of income, the assessee has claimed 10% of withholding tax on royalty income amounting to ₹.1,39,27,256/- and the Assessing Officer has allowed the same during the scrutiny proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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