2023 (5) TMI 1103 - AT - Income Tax

Denial of foreign tax paid - assessee furnished the statement in Form 67 with a delay - effect of overriding provisions - HELD THAT:- We find from Article 25(2)(a) of the DTAA that where a resident of India derives income which, in accordance with the provisions of the convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of the resident an amount equal to the income tax paid, paid in the United States, whether directly or by deduction.

In view of this provision over riding the provisions of the Act, according to us, Rule 128(9) of the Rules has to be read down in conformity thereof. Rule 128(9) of the Rules cannot be read in isolation. Rules must be read in the context of the Act and the DTAA impacting the rights, liabilities and disabilities of the parties.

We allow the appeal, and direct AO to verify the details of the foreign tax paid by the assessee on the earnings at foreign source and take a view inconformity with the established law as discussed - Appeal of the assessee is allowed.