Foreign Tax Credit already Paid: ITAT directs to Exclude Foreign Assignment Salary for Income Recomputation

The ITAT ruled that foreign tax credit (FTC) paid on income from a foreign assignment should be excluded from income recomputation. The case involved a taxpayer who earned salary from foreign sources and claimed FTC. The tax authorities, however, did not exclude the salary while recomputing his taxable income. ITAT emphasized that under Section 90 of the Income Tax Act, a taxpayer is entitled to FTC, and this amount should be deducted from the taxable income. The ruling highlighted that tax authorities should correctly apply FTC provisions and not include foreign-sourced income that has already been taxed abroad. The decision underlines the taxpayer's right to avoid double taxation on global earnings.