DCIT Vs Suzlon Energy Ltd. (ITAT Ahmedabad)
ITAT Ahmedabad held that denial of Foreign Tax Credit [FTC] on the ground that corresponding income has not been offered for tax in the year under appeal is not justifiable. Accordingly, FTC allowed.
Facts- The assessee is a company engaged in the business of manufacturing Wind Turbine Generators [WTG], Rotor blades, etc. The assessee company rendered certain technical services to its Subsidiary company namely M/s. Suzlon Energy [Tianjin] Ltd at China [hereinafter referred as SETL] and earned royalty income aggregating to Rs.16,22,63,445/= and Rs.11,05,97,227/= during the asst. years 2008-09 and 2007-08 respectively. These royalty incomes were already taxed in China on gross basis at 10% under Article 23[2] of the India-China Double Taxation Avoidance Agreement. Further these royalty incomes already been accepted to be at Arm’s Length Price by TPO while framing transfer pricing assessment for the above asst. years, thus there is no dispute by TPO in respect of the royalty income. However, the assessee company failed to claim the Foreign Tax Credit u/s. 90 of the Act while filing the Return of Income as the Tax With-holding Certificates [TWC] were received by the Assessee company in September 2009 from SETL, China.
