2 months ago
ITAT Grants Relief for Wrongly Reported Foreign Salary
A person who worked in Australia and earned a salary there made a mistake by including that salary in his Indian tax return.
He asked the Indian tax authorities to correct this mistake.
The authorities agreed that the salary should not be taxed in India because it was earned in Australia.
However, they said he could not get a tax credit in India for the taxes he paid in Australia because the salary was not taxable in India.
The person had to follow the rules set by the India-Australia tax agreement.
A taxpayer mistakenly reported his Australian salary in his Indian ITR for AY 2020-21.
The Delhi ITAT ruled that the salary was not taxable in India under the India-Australia DTAA.
The taxpayer sought a foreign tax credit for taxes paid in Australia but was denied.
The tribunal reasoned that foreign tax credit is only available against income taxable in India.
The taxpayer had filed Form 67 to claim the foreign tax credit and sought rectification under Section 154 of the Income-tax Act.
- Who
- A taxpayer who earned a salary in Australia
- What
- The taxpayer mistakenly reported his Australian salary in his Indian ITR and sought relief from the ITAT
- Where
- Delhi, India
- When
- During the financial year relevant to Assessment Year 2020-21
- Why
- The taxpayer wanted to correct the mistake and claim a foreign tax credit for taxes paid in Australia
Taxpayer's Argument
Income Tax Department's Argument
Taxability of Foreign Income
Taxpayer's Argument
The taxpayer argued that under the India-Australia DTAA, salary is taxable only in the country where the employment is exercised, which in this case was Australia.
Income Tax Department's Argument
The Income Tax Department initially included the Australian salary in the taxpayer's Indian taxable income.
Foreign Tax Credit
Taxpayer's Argument
The taxpayer sought a foreign tax credit for taxes paid in Australia, arguing that it should be credited against any Indian tax liability.
Income Tax Department's Argument
The tribunal denied the foreign tax credit, stating that it is only available against income that is taxable in India.
Key facts
- Taxpayer's Salary
- ₹14.16 lakh
- Foreign Tax Credit Claimed
- ₹3.4 lakh
- Assessment Year
- 2020-21
- DTAA Article Cited
- Article 15
- Form for FTC
- Form 67
- Notification for FTC Filing
- Notification No. 100/2022
Quotes
Delhi ITAT
Income Tax Appellate Tribunal in New Delhi
“"The salary received in Australia for services rendered there 'is not taxable at all in India in view of Article 15 of India-Australia DTAA.'”
businesstoday.in
Sources
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