ACIT Vs Shardul Amarchand Mangaldas & Co. (ITAT Delhi)
Delhi ITAT Allows Foreign Tax Credit to Shardul Amarchand Mangaldas on Overseas Legal Fees
The Delhi ITAT dismissed the Revenue’s batch of appeals and upheld the grant of Foreign Tax Credit (FTC) to Shardul Amarchand Mangaldas & Co. in respect of taxes withheld overseas on professional fees earned from foreign clients. The Tribunal held that legal and consultancy fees received from jurisdictions such as Japan, China, Malaysia, Uganda, Sri Lanka, Poland and Oman were eligible for FTC under section 90/90A read with Rule 128, where the gross income had been offered to tax in India and the assessee had duly filed Form 67 along with the requisite foreign tax withholding certificates.
The Assessing Officer had denied the FTC on the ground that the receipts constituted independent personal services under the relevant DTAA articles rather than fees for technical services (FTS). Rejecting this view, the Tribunal relied on the Mumbai ITAT decisions in Amarchand & Mangaldas & Suresh A. Shroff & Co. and Cyril Amarchand Mangaldas, holding that under the India–Japan DTAA, legal fees earned by a partnership firm were covered by Article 12 (FTS) and not Article 14 relating to independent personal services. Consequently, the taxes withheld in Japan and other treaty jurisdictions were eligible for credit in India.
The Tribunal also rejected the Revenue’s plea for remand, observing that there was no dispute regarding the assessee having offered the foreign receipts to tax in India, furnished Form 67 and the foreign tax certificates, or complied with Rule 128. Since all statutory conditions for claiming FTC had been satisfied, the Revenue’s appeals for all the assessment years were dismissed.
Cases Discussed
- DCIT v. Cyril Amarchand Mangaldas (ITAT Mumbai), 154 taxmann.com 99
- Amarchand & Mangaldas & Suresh A. Shroff & Co. (ITAT Mumbai), 122 taxmann.com 248
FULL TEXT OF THE ORDER OF ITAT DELHI
1. These batch of appeals have been filed by the Revenue against a common order passed by the learned CIT(A) u/s 250 of the Income Tax Act, 1961 dated 29th December, 2025 in following appeal numbers:
| A.Y. | Appeal No. | Order u/s Section of Assessment Order |
|---|---|---|
| 2018-19 | NFAC/2017-18/10022110 | 143(3) read with sections 143(3A) & 143(3B) of the Income-tax Act |
| 2018-19 | NFAC/2017-18/10340041 | 147 rws 144B |
| 2017-18 | CIT(A),Delhi-20/10651/ 2019-20 | 143(3) of the Income-tax Act |
| 2020-21 | NFAC/2019-20/10174802 | 143(3) read with section 144B of the Income tax Act |
| 2021-22 | NFAC/2020-21/10206002 | 143(3) read with section 144B of the Income tax Act |
| 2022-23 | NFAC/2021-22/10357088 | 143(3) read with section 144B of the Income tax Act |
2. The ld. CIT(A) has considered Appeal No. NFAC/2017-18/10022110 for AY 2018-19(being ITA No.2328/Del/2026 herein) as the “Lead Year” and has held that the findings of the Lead Year are applicable mutatis mutandis to other appeals as well because the nature of issues involved, facts involved as also the grievances as were raised by the assessee before the ld. CIT(A) were common.
