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2021 (8) TMI 909 - ITAT BANGALOREClaim of Foreign Tax Credit under Section 90 - Whether lower authorities are not justified in failing to appreciate that the case of the Appellant falls under Section 90(1)(a)(ii) and hence the appellant is eligible for relief in respect of tax paid in Tanzania? - whether the tax deducted at source in Tanzania is not an income that accrues or arises outside India and therefore, the same cannot be included in the total income of the Appellant? - HELD THAT:- In the case of section 90(1)(a)(i), relief is granted in respect of income on which income tax is paid in both the countries. Whereas, u/s. 90(1)(a)(ii) of the Act, relief is granted in respect of income tax chargeable in both the countries - under clause (i) assessee should have paid tax in both countries, whereas under clause (ii) it is enough if the income is chargeable to tax in both the countries and there is no mandate that the tax should have been paid in both the countries. He also brought to our attention Article 23 of DTAA between India & Tanzania. What is said in the case of India-Korea DTAA is squarely applicable to the facts of the present case. We have already referred to the observations of this Tribunal in the case of Ittiam Systems Pvt. Ltd. [2021 (1) TMI 1106 - ITAT BANGALORE] in the earlier paragraphs. Accordingly, relief u/s. 90 to be given on the amount which is lower of the following i.e., Tax paid on income outside India; or payable in India on such doubly taxable income, whichever is lower. Steps to compute the double taxation relief are as follows:- (i) Compute global income i.e., aggregate of Indian income and foreign income; (ii) Compute tax on such global income as per the slab rates applicable as per Indian Income-tax Act; (iii) Compute average rate of tax (i.e., global income divided by amount of tax); (iv) Compute amount by multiplying foreign income with such average rate of tax; and (v) Compute tax paid in foreign country. The amount of relief shall be lower of (iv) & (v) i.e., tax paid on income outside India and tax payable under the Indian Income-tax. We direct the AO to grant FTC as above. This ground is partly allowed. Deduction u/s 80G - AR submitted that this issue though raised before the CIT(Appeals), but he failed to adjudicate the same. The evidence is available to the extent of ₹ 3,78,000 for payment of donation and the assessee is entitled to donation u/s. 80G - HELD THAT:- After hearing both the parties, we remit this issue to the file of AO for fresh decision on this issue with a direction to the assessee to provide necessary evidence in support of the claim of deduction u/s. 80G.
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