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Actor Sonakshi Sinha wins Rs 29 lakh foreign tax credit dispute

The Times of India logo The Times of India 26-09-2022 Lubna Kably
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MUMBAI: The Mumbai bench of Income-Tax Appellate Tribunal (ITAT) has awarded Bollywood actress Sonakshi Sinha a foreign tax credit claim of Rs 29 lakh for taxes paid in the UK after a tax officer denied it for not filing a relevant form within the stipulated time.

The I-T Act says a taxpayer in India is eligible to get credit for taxes paid in another country against salary or professional income earned overseas or for overseas assets. The aim is to prevent double taxation. The credit is allowed for the year in which such foreign income is offered for taxation in India.

Sinha’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 filed Form 67 to claim the credit on January 20, 2020. Rule 128 (9) says the form should be filed on or before the date of filing tax returns.

Sinha was denied the credit claim because of the delay and 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.

Puneet Gupta, partner, People Advisory Services at EY-India. He said the ITAT decision will help taxpayers involved in similar litigation. Apart from Sinha, the tribunal also awarded another litigant, Anuj Bhagwati, a foreign tax credit claim of Rs 14. 22 lakh for taxes paid in the US.

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.

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