ITAT Mumbai Restores Foreign Tax Credit Claim for Fresh Verification

The Income Tax Appellate Tribunal (ITAT), Mumbai, has restored a matter involving the denial of a foreign tax credit, for fresh verification.

The assessee, Mr. Vinay Dube, had earned income in both India and the USA. He declared Rs 5,03,70,569 in its ITR and claimed relief of Rs 84,16,067 under section 90 against the taxes paid in the USA.

When the assessee was asked to substantiate his claim, he showed the income tax return filed in the USA only for the Calendar Year 2022. Regarding the remaining calendar years, he said that the return for that period is in process, and he will show the same once it’s completed.

The Assessing Officer had denied the claim, holding that the claim under section 90 had been availed on an estimated basis and without any clarification.

The assessee filed an appeal before the CIT(A), which partially allowed the appeal by directing the AO to grant a proportionate rebate under section 90/90A after verification.

The matter then reached the ITAT. The Tribunal observed that there was no dispute that the assessee earned income and paid taxes in both countries. It was observed that the assessee had only failed to furnish its ITR in the USA for the Calendar Year 2023.

During the proceedings, the assessee informed the Tribunal that the USA income tax return for the remaining period had now been filed and taxes had been paid. Considering this submission, the tribunal held that a complete verification was required.

Therefore, the ITAT restored the matter to the Assessing Officer. It directed the officer to verify the tax paid by the assessee for the entire financial year 2022-23 from the tax return filed by the assessee in the USA.