In ITA no.1046/Mum./2023 -ITAT- ITAT (Mumbai) rules in favour of Cyril Amarchand Mangaldas, allows Foreign Tax Credit for services rendered in Japan
Members Prashant Maharishi (Accountant) & Sandeep Singh Karhail (Judicial) [28-06-2023]

Read Order: Dy. Commissioner of Income Tax Circle–16(2), Mumbai v. Cyril Amarchand Mangaldas

Chahat Varma

New Delhi, July 4, 2023: In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal has ruled in favour of Cyril Amarchand Mangaldas (assessee), upholding the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The ruling affirmed the allowance of the claim of foreign tax credit under Section 90 of the Income Tax Act for the income received by the assessee fors services rendered in Japan.

In the matter at hand, the dispute centered around the Revenue's objection to the allowance of tax credit to the assessee for taxes withheld by clients based in Japan. The assessee had reported income under ‘income from business or profession’ and ‘income from other sources’ during the relevant assessment year. They sought relief under Section 90 for the income earned from services rendered in Japan. The Assessing Officer (AO) contended that since the income was not taxable in Japan, there was no requirement to withhold taxes. Consequently, the AO disallowed the foreign tax credit claimed by the assessee. However, the CIT(A) granted the foreign tax credit to the assessee, relying on a previous decision by a Co-ordinate bench of the Tribunal in a similar case for the AY 2014-15, which shared identical facts.

The two-member bench of Prashant Maharishi (Accountant) and Sandeep Singh Karhail (Judicial) observed that a Co-ordinate bench of the Tribunal had previously decided a similar issue in favour of the taxpayer in the case of Amarchand & Mangaldas & Suresh A. Shroff & Co v. Assistant Commissioner of Income Tax Circle [LQ/ITAT/2020/5783].

The bench stated that since there were no allegations of any change in facts or laws relevant to the present case, they saw no reason to depart from the view taken by the Co-ordinate bench in the aforementioned decision.