The Income Tax Appellate Tribunal (ITAT), Pune, has allowed a non-resident Indian (NRI) to pursue a claim for a tax refund of around Rs 1.70 lakh on mutual fund gains, even though the deadline to revise the income tax return (ITR) had expired. The tribunal directed the assessing officer to recompute the tax liability after examining the taxpayer’s claim under the India-Singapore Double Taxation Avoidance Agreement (DTAA).
The case concerns an NRI working in Singapore who declared Rs 17.15 lakh in long-term capital gains from mutual fund investments in his ITR for assessment year 2024-25. The return was processed by the Income Tax Department without adjustments, and tax of Rs 1,70,372 was determined against the TDS credit.
Why did the NRI seek a tax refund?
The taxpayer had offered the entire capital gain to tax in India. However, a subsequent Mumbai ITAT ruling in March 2025 held that gains earned by a Singapore tax resident from Indian mutual fund units could fall under Article 13(5) of the India-Singapore DTAA, under which such gains may be taxable only in Singapore.
The taxpayer argued that the ruling supported his claim for relief in India. Since the deadline to revise his return had passed, he appealed against the intimation issued under Section 143(1) of the Income-tax Act, 1961.
The first appellate authority dismissed the appeal, holding that it was not maintainable because the Centralised Processing Centre (CPC) had made no adjustments to the return.
What did ITAT Pune rule?
The Pune tribunal set aside the appellate order, relying on the Bombay High Court’s ruling in CIT v. Pruthvi Brokers & Shareholders. The High Court had held that taxpayers can raise fresh claims before appellate authorities even if they were not made in the original return or before the assessing officer.
The tribunal directed the taxpayer to submit a revised computation of capital gains to the jurisdictional assessing officer. The officer must verify the supporting documents, reconsider the tax liability in light of the treaty-related ruling, provide an opportunity of hearing and grant a refund, if due.
“Respectfully following the judgement of Hon’ble Bombay High Court in the case of Pruthvi Brokers & Shareholder (supra), we find force in the argument of Ld. Counsel of the assessee and accordingly, deem it appropriate to set-aside the order passed by Ld. CIT(A) and direct the assessee to furnish revised computation regarding capital gain income before the Jurisdictional Assessing Officer, who shall re-compute the tax liability afresh and as per fact and law in the light of coordinate bench decision passed in the case of Mrs. Anushka Sanjay Shah (supra) and grant the refund, if any, arising to the assessee after due verification of documents with regard to capital gain income,” ITAT said in the order.
Can taxpayers claim relief after missing the revised ITR deadline?
An tax expert said the ruling highlights that a taxpayer may still have an appellate remedy when a claim was inadvertently missed in the original return.
She noted that taxpayers should first check whether they can file a revised return within the prescribed deadline, as this is generally a more straightforward route. Where that option is no longer available, an appeal may be possible, depending on the facts and applicable legal principles.
Taxpayers seeking treaty relief should also keep their Tax Residency Certificate, proof of residential status, fund-wise transaction statements and capital gains computations ready for verification.
Does this mean all NRI mutual fund gains are tax-free?
The tribunal has not finally ruled that the gains in this case are exempt from Indian tax. It has sent the matter back to the assessing officer for fresh examination.
The outcome will depend on the taxpayer’s eligibility for treaty benefits, the relevant treaty provisions and verification of the supporting documents. The ruling also does not mean that mutual fund gains earned by NRIs in other countries are automatically exempt from tax in India.
