The Income-Tax Appellate Tribunal’s Mumbai bench has awarded Bollywood actor Sonakshi Sinha a foreign tax credit claim of ₹29 lakh for taxes she paid in England, reported The Times of India.
This happened after the tax department denied the credit for not filing a relevant form within the stipulated time.
The I-T Act says a taxpayer is entitled to receive credit for taxes paid in another country against salary or professional income earned overseas or for overseas assets to avoid double taxation. The credit is allowed for the year in which such foreign income is offered for taxation in India.
The actor’s tax returns for 2017-18 was selected for limited scrutiny to determine the correctness and eligibility of credit claimed by her. The tax officer said she had filed her returns on September 22, 2018, but the Form 67 to claim the credit was filed on January 20, 2020 whereas says the form should ideally be filed on or before the date of filing tax returns according to the Rule 128 (9).
As a result, she was denied the credit claim because of the delay and consequently, the case reached ITAT. Last month, Central Board of Direct Taxes (CBDT) amended this rule, allowing people to file the credit form on or before the end of the relevant assessment year. “This extension will apply to foreign tax credit claims during for the current financial year 2022-23 and beyond,” said.
ITAT agreed with Sinha’s submission that the form is a procedural requirement, not mandatory. The tribunal also observed that Rule 128 does not prescribe denial of credit.