In a significant ruling for non-resident Indians (NRIs), the Income Tax Appellate Tribunal (ITAT) Pune has upheld the right of a Singapore-based individual to claim a refund of ₹1.70 lakh in capital gains tax. This decision reinforces that eligible taxpayers can pursue Double Taxation Avoidance Agreement (DTAA) benefits even if they initially miss claiming them during their income tax return (ITR) filing.
The Case of Varun: A Singaporean NRI's Tax Dispute
The case involved an NRI named Varun, who resides and works in Singapore while holding investments in Indian mutual funds. After selling some of these investments, Varun paid ₹1.70 lakh in capital gains tax and filed his original ITR. He later realized that under the India-Singapore DTAA, these capital gains might be taxable only in Singapore, where such gains are typically exempt under his circumstances, meaning his Indian tax liability should have been nil.
Initial Refusal and Legal Challenge
Upon discovering his error, Varun sought a refund. However, the Income Tax authorities rejected his claim, citing that the deadline for filing a revised return had passed and the benefit should have been claimed in the original ITR. Undeterred, Varun appealed to the ITAT Pune, arguing that a procedural deadline should not negate his substantive right to DTAA relief.
He supported his argument by referencing prior judicial precedents, including rulings from the Bombay High Court (Pruthvi Brokers & Shareholders) and the Mumbai ITAT (Anushka Sanjay Shah). These precedents affirm that legitimate claims can be considered during appellate proceedings, even if not raised in the initial return.
ITAT Pune's Favorable Ruling and Implications
On October 12, 2026, the ITAT Pune ruled in Varun's favor, allowing his DTAA claim and paving the way for the ₹1.70 lakh refund. This landmark decision clarifies that missing a procedural deadline does not automatically extinguish a taxpayer's entitlement to treaty benefits, provided the claim is legally valid and supported by documentation.
This ruling carries important implications for other NRIs investing in India. It underscores the necessity of understanding applicable DTAA provisions, obtaining a valid Tax Residency Certificate (TRC), and maintaining thorough supporting documents. While it's always best to claim eligible treaty benefits during the original ITR filing, this case offers a pathway for those who identify omissions later.
NRIs who find themselves in similar situations are advised to seek professional tax advice on available remedies rather than assuming a mistakenly paid amount cannot be recovered.