Thejo Engineering Limited Vs Deputy Director of Income Tax (Madras High Court)
In a recent decision by the Madras High Court, Thejo Engineering Limited challenged a rectification order denying the Foreign Tax Credit (FTC) under the Income Tax Act, 1961. The case highlights the complexities involved in international tax credits and the procedural nuances of their claims. This article delves into the court’s ruling, the facts of the case, and its implications for taxpayers navigating foreign tax credits.
Thejo Engineering Limited, a company with international operations, had claimed a Foreign Tax Credit of Rs. 1,14,62,414 for the assessment year 2022-2023. This claim was based on taxes paid by its Australian branch. Despite the submission of all necessary documentation, including Form 67 and supporting Australian tax records, the Central Processing Centre (CPC) initially denied the credit.
The petitioner filed a rectification petition challenging this denial, but the CPC rejected it, leading to the writ petition filed with the Madras High Court. The petitioner argued that while the computations for the FTC were correctly reflected, the credit itself was unjustifiably denied.
The Madras High Court scrutinized the case by reviewing the company’s tax return, activity statements, and the relevant intimation under Section 143(1). The court noted that the computation of the FTC by the assessing officer was accurate and matched the taxpayer’s claim. Despite this, the credit was denied without clear justification.
