The ITAT Pune has ruled that an NRI can claim a tax refund on mutual fund gains under the India-Singapore DTAA, even after the window to revise tax returns has closed. The tribunal, citing Bombay High Court precedent, allowed the claim to be raised during the appellate process. However, the case has been sent back to the tax officer for verification, highlighting that such relief depends on valid documentation and residency status.
The Income Tax Appellate Tribunal (ITAT) in Pune has provided relief to a non-resident Indian (NRI) taxpayer by allowing a tax refund claim, even though the deadline to file a revised income tax return had already passed. The dispute involved a claim for Rs 1.70 lakh related to long-term capital gains from mutual fund investments for the 2024-25 assessment year.
The taxpayer had initially declared the gains as taxable in India. However, after the statutory window for revising returns was closed, the investor sought to claim an exemption under the India-Singapore Double Taxation Avoidance Agreement (DTAA). The tax department had initially dismissed this plea on technical grounds, arguing that the request was not maintainable once the filing deadline had elapsed.
Appellate Authority and Legal Precedent
The Pune tribunal overturned the dismissal by relying on the landmark Bombay High Court judgment in the case of CIT versus Pruthvi Brokers & Shareholders. The court had established that appellate authorities have the legal power to consider fresh claims, even if they were not part of the original income tax return or if the taxpayer had missed the initial filing deadline. This ruling clarifies that the appellate process is not strictly limited to the documents and claims made in the initial tax filing.
Requirement for Verification and Documentation
While this ruling is a positive development for taxpayers, it does not guarantee an automatic refund. The ITAT has remanded the case back to the jurisdictional assessing officer for a comprehensive review. The officer is required to verify the taxpayer’s residency status and the specific nature of the mutual fund transactions under Article 13(5) of the India-Singapore tax treaty.
Investors looking to claim tax treaty benefits must recognize that documentation is critical. Simply relying on judicial precedents is not enough; taxpayers are obligated to provide a valid Tax Residency Certificate (TRC) and detailed transaction statements to prove their eligibility. The final outcome of this claim will depend on whether the investor can provide sufficient evidence to satisfy the assessing officer’s requirements during this fresh verification process.