Wipro Limited Vs ACIT (Karnataka High Court)
Summary: The Karnataka High Court allowed Wipro Limited’s appeal and remitted to the ITAT the issue of whether taxes paid to foreign Governments and authorities, for which credit was not available under Sections 90 and 91 of the Income Tax Act read with the applicable DTAAs, could be claimed as deduction from business income under Section 37(1). Wipro, an Indian resident taxable on its global income for AYs 2009-10 to 2014-15, had earned income outside India and paid taxes in the respective foreign jurisdictions. It claimed deduction of such foreign taxes under Section 37(1), but the AO and DRP rejected the claim. The High Court noted that the ITAT had not considered this specific ground and had subsequently rejected Wipro’s miscellaneous petition seeking reconsideration. Wipro relied upon the Bombay High Court ruling in Reliance Infrastructure Ltd. Vs Commissioner of Income Tax, where relief concerning foreign taxes was granted, and submitted that the ruling had subsequently been followed by the ITAT in Wipro’s own cases for AYs 2015-16 to 2017-18. The Revenue did not dispute the request for reconsideration, subject to keeping its contentions open. Accordingly, the High Court set aside the ITAT order dated 05.10.2020 in IT(TP)A No.222/Bang/2016 and remitted the matter to the Tribunal for fresh consideration in accordance with law, expressly keeping all contentions of both parties open. Thus, the High Court did not finally decide that the foreign taxes were deductible under Section 37(1); it directed the ITAT to reconsider the claim.
