ITAT dismiss appeal filed against claim of  Foreign Tax Credit with respect to profit earned from Singapore Branch Office

The Mumbai bench of Income Tax Appellate Tribunal ( ITAT )  dismissed the appeal filed by the Income Tax Department  against claim of  foreign tax credit with respect to profit earned from singapore branch office

The Assessee Bytescale Technologies Pvt.Ltd. had a Branch Office at Singapore which was independently assessed and taxed in Singapore as per applicable laws. During the relevant previous year, the Assessee had earned profits of INR 2,55,39,452/- in the Branch Office on which Assessee had paid tax of INR 26,21,694/- in Singapore.

In the return of income filed in India, all the revenues including revenues of the Singapore branch offices were offered to tax on consolidated basis in India. Since the profits of the Singapore Branch Office were offered to tax in Singapore as well as in India, the Assessee had claimed in India the credit for taxes of INR 26,21,694/- paid in Singapore. However, the Assessing Officer denied the aforesaid claim of foreign tax credit.

Aggrieved by the order the assessee filed an appeal before the CIT( A ) who allowed  appeal. Therefore  the revenue filed another appeal before the tribunal

During the adjudication the bench observed that  the  Singapore income which is already offered to tax in Singapore is included in the Total income returned in India, thus the taxes paid at Singapore needs to be given credit in the total tax payable in India

After reviewing the facts the ITAT bench of Rifaur Rahman, (Accountant Member) and Rahul Chaudhary, (Judicial Member)

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