ITAT allows Foreign Tax Credit to Taxpayer on Remuneration Income under India-UK Tax Treaty [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench allowed the foreign tax credit to a taxpayer on his remuneration income under the India-UK tax treaty.

The assessee, Kapil Dev Ranwan who is a resident of India and has derived from salary which has suffered tax in the UK on account of his employment exercise in the UK would be eligible to claim a tax credit under this Article.

The assessee has provided all the necessary details and documentation in support of the foreign tax credit claim under Article 24 of the India-UK Double Taxation Avoidance Agreement (DTAA).

The assessee submitted that the Assessing Officer had not considered the provisions of Article 24 of the India-UK DTAA and the applicability of the same during the assessment proceedings and the assessee had not been given a reasonable opportunity of being heard to substantiate his claim.

The Assessing Officer erroneously applied the provisions of Article 16 in the India UK DTAA which are inapplicable in the present entity as the assessee is a resident and ordinarily resident in India during the concerned previous year.

As per Article 16 (2) of the  India-UK DTAA remuneration derived by an Indian resident in respect of an employment in the UK, will not be taxed in the UK, if he is present in the UK for less than 183 days during a fiscal year, the remuneration is paid by or on behalf of an employer who is not a UK resident and the remuneration is not deductible in computing the taxable profits in the UK of such employer.

The Coram consisting of Judicial Member, Suchitra Kamble, and Accountant Member, N.K. Billaiya noted that the assessee was working in the UK for more than 183 days which was never disputed by the Revenue at any point in time. Besides this, the Revenue authorities are very well aware that the assessee has paid taxes in the UK for the remuneration received in the UK. The assessee is a resident of India.

The Tribunal said that Article 16(2) does not apply in the present scenario.

The ITAT after considering the provisions of Section 90(2) of the Income Tax Act, 1961 and Article 24 of the India-UK DTAA held that the claim made by the assessee is valid and, therefore, the Assessing Officer as well as the CIT(A) was not right in making and sustaining the addition in that respect.