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State as well as Federal taxes paid in USA are entitled to tax credit: ITAT

May 21, 2019[2019] 105 taxmann.com 323 (Delhi - Trib.)
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International Taxation : Assessee who is a resident but not ordinarily resident would be entitled for tax credit under section 91 in respect of federal as well as state taxes paid by him in USA

• Provisions of section 91 are to be treated as general in application and these provisions can yield to treaty provisions only to extent the provisions of treaty are beneficial to assessee; that is not the case so far as question of tax credits in respect of state income taxes paid in USA are concerned. Accordingly, even though assessee is covered by scope of India US and India Canada tax treaties, so far as tax credits in respect of taxes paid in these countries are concerned, provisions of section 91, being beneficial to assessee, hold the field. As section 91 does not discriminate between state and federal taxes, and in effect provides for both these types of income taxes to be taken into account for the purpose of tax credits against Indian income tax liability, assessee is, in principle, entitled to tax credits in respect of the same.

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