Indian film industry actor Sonakshi Sinha recently won Rs 29 lakh foreign tax credit dispute. Mumbai bench of Income-Tax Appellate Tribunal (ITAT) has awarded Sinha a foreign tax credit claim of Rs 29 lakh for taxes paid in the UK. Sinha’s I-T return for the financial year 2017-18 was selected for limited scrutiny to determine the correctness and eligibility of FTC claimed by her. This claim was earlier denied by the tax officer as the relevant form was not filed in time.
The I-T Act says a taxpayer in India is eligible to get credit for taxes paid in another country against salary or professional income earned overseas or for overseas assets. As per reports, the aim is to prevent double taxation.
The I-T officer ascertained that she had filed her tax return on September 22, 2018, but had filed form number 67 for claiming FTC much later on January 20, 2020. As per Rule 128 (9), this form was required to be filed on or before the date of filing the tax return. It should be noted that the Central Board of Direct Taxes has amended this rule.
“The amended rules, which came into force from April 1, 2022, provided that the form can now be furnished on or before the end of the relevant assessment year, as opposed to before the due date of filing the I-T return. This extension in time will apply to FTC claims for the current financial year 2022-23 and beyond,” said Puneet Gupta, partner, People Advisory Services at EY-India.
The ITAT agreed with Sinha’s submission that the filing of the form is a procedural requirement, and not mandatory. It also observed that Rule 128 does not prescribe for denial of credit of the FTC claim.