Cross Border Clarity: No FTC, No Deduction Either

 The Mumbai ITAT, in Tata Communications Transformations Services Ltd. v. DCIT [2026], held that foreign taxes cannot be claimed as a deduction merely because the Foreign Tax Credit (FTC) remains unutilised. The Tribunal clarified that Section 40(a)(ii) disallows foreign taxes that are eligible for relief under Sections 90/91, regardless of whether the credit is actually used. For businesses in loss years, foreign withholding taxes may therefore become a sunk cost, making FTC planning crucial.