ITAT Restores Rs 1.47 Lakh Foreign Tax Credit Claim Dispute for Fresh Adjudication After Condoning 86-Day Delay:

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has restored the matter of a taxpayer whose foreign tax credit (FTC) of Rs 1.47 lakh was denied while processing her income tax return for Assessment Year (AY) 2018-19. The Tribunal also condoned an 86-day delay in filing the appeal, noting that the delay was caused by the illness of the assessee’s authorised representative.

Tanya Soneja, a resident of the Philippines and a non-resident in India, had declared a salary income of Rs 10.98 lakh in her Indian income tax return (ITR). She had paid taxes outside India amounting to Rs 2.41 lakh and claimed foreign tax credit under Section 90 of the Income Tax Act. However, while processing her return under Section 143(1), the Central Processing Centre (CPC) denied the foreign tax credit of Rs 1.47 lakh.

The aggrieved assessee approached the Commissioner of Income Tax (Appeals) [CIT(A)], challenging the denial of Rs 1.47 lakh FTC. However, the appeal was dismissed over delayed filing. Subsequently, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT) with a delay of 86 days. She submitted that her chartered accountant, who was handling the appeal, had suffered from a severe skin infection and was unable to attend professional work or complete the appeal within the prescribed period.

After examining the condonation petition and the chartered accountant's affidavit, the ITAT found that the delay was due to sufficient cause. Accordingly, the Tribunal condoned the 86-day delay and admitted the appeal.

On the issue of foreign tax credit, the ITAT observed that "if the assessee is eligible for such a refund or rebate under section 90 of the Act, the Central Processing Centre should have granted it to the assessee. In this case, the assessee could not download even the intimation passed under section 143(1) of the Act, and it was not available on the portal. This was also the reason for filing the appeal before the learned CIT – A."

It was further noted that "the learned CIT – A dismissed the assessee’s appeal on account of delay; however, the reason for the delay was that the assessee was not able to obtain the intimation under section 143(1) of the Act itself. In view of this, it is not possible to know whether the assessee complied with all the provisions for filing Form No. 67 along with the return of income, or before the processing of the return of income, and for what reason the foreign tax credit was denied to the assessee."

Accordingly, the tribunal restored the matter to the Assessing Officer for fresh examination. The assessee was directed to substantiate her claim for foreign tax credit of Rs 1.47 lakh and produce the relevant Form 67. The Assessing Officer was directed to grant the credit if the claim is found to be in accordance with law. The appeal was allowed for statistical purposes.