2025 (6) TMI 1058 - AT - Income Tax

Denial of DTAA benefits - Treating the income at normal rates of taxation without considering the special DTAA rate claimed by the assessee - HELD THAT - Assessee had declared foreign income taxable at special rates under the DTAA and had filed Form 67 before the issuance of the intimation. CPC did not consider the DTAA claim and taxed the amount at normal rates. CIT(A) also failed to examine the merits simply dismissing the appeal by directing the assessee to file a Section 154 rectification application. We in the interest of justice hold that the matter requires re-examination by the CIT(A). Accordingly the entire issue is remanded to the file of the CIT(A) with a direction to examine the DTAA claim in accordance with law and allow relief to the assessee after granting due opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

Summary

The Appellate Tribunal (ITAT Cochin) heard an appeal by the assessee against the CIT(A)'s order dated 29.03.2025 for AY 2024-25. The assessee declared foreign income of Rs. 2,50,29,867/- taxable at a special rate under the DTAA and filed Form 67 before issuance of intimation under Section 143(1). However, the CPC processed the return taxing the income at normal rates. The CIT(A) dismissed the appeal, directing the assessee to seek rectification under Section 154 instead of adjudicating on merits.The Tribunal held that the CIT(A) erred in not examining the DTAA claim on merits and merely directing rectification. Since the Form 67 was duly filed and the claim was made correctly, the Tribunal remanded the matter to the CIT(A) with a direction to re-examine the DTAA claim in accordance with law, granting the assessee a proper opportunity of hearing. The appeal was allowed for statistical purposes.