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Income Tax Appellate Tribunal, ‘D‘ BENCH
Before: SHRI AMIT SHUKLA & MS. PADMAVATHY S
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 13/02/2023 passed by NFAC, Delhi in relation to the adjustment made u/s.143(1) for the A.Y.2020-21. 2. In the grounds of appeal, assessee has raised the following grounds:- 1. Short grant of Foreign Tax Relief
2 ITA No.1202/Mum/2023 M/s. Deloitte India Advisory Services Pvt. Ltd 1.1 The learned NFAC erred in confirming the restriction of foreign tax relief to Rs. 1,47,58,272 by the Additional Director of Income Tax (ADIT), CPC, in the intimation issued under section 143(1) of the Income Tax Act (the Act) instead of Rs. 2,82,44,841 as claimed by the appellant in revised return of income. 1.2 The learned NFAC erred in not appreciating fact that the appellant has filed original Form 67 within the time and revised Form 67 filed on 31 March 2021 I.e. on or before the revised return, therefore the appellant ought to have been allowed entire foreign tax relief of Rs. 2,82,44,841. 1.3 The learned NFAC ought to have appreciated that Rule 128 of the Income Tax Rules, 1962 does not provide for disallowance of foreign tax relief in case of filing of revised Form 67 along with the revised return. 1.4 The learned NFAC ought to have granted the balance foreign tax relief amounting to Rs. 1,34,86,569 since the appellant has filed the revised form 67 before the due date of filing of revised return of income.
The brief facts are that assessee is a domestic company rendering services to foreign clients. In some cases taxes are withheld by the foreign clients as per their domestic laws. The assessee also pays taxes in foreign countries in some cases, where it has permanent establishment / other presence. Accordingly, the assessee used to take credit of such tax paid / withheld in foreign countries which was claimed in the return of income in accordance with the provisions of Section 90 of the Act read with applicable DTAA. 4. For the A.Y. 2020-21 the due date for filing of return of income u/s.139(1) was 30/10/2020, however, the same was extended from time to time by the CBDT on account of Covid and
3 ITA No.1202/Mum/2023 M/s. Deloitte India Advisory Services Pvt. Ltd the final extension was granted upto 15/02/2021 vide Notification dated 31/12/2020. Accordingly, assessee filed its return of income on 12/02/2021 and Form 67, wherein a claim for foreign tax credit of Rs.1,47,58,272/- was made based on the FTC certificates available with the assessee which was filed on 11/02/2021. Later on assessee filed a revised return on 31/03/2021 for claiming the additional FTC based on documents received by the assessee wherein FTC claim was revised to Rs.2,82,44,841, i.e., additional FTC claim of Rs. 1,34,86,569 was made. Accordingly, a revised Form 67 was also filed on 31/03/2021. The CPC, Bangalore processed the revised return vide intimation dated 28/12/2021 issued under section 143(1), which he computed the FTC at Rs. 2,34,48,645, but gave credit only for Rs. 1,47,58,272 as against FTC credit of Rs.2,82,44,841 claimed by the assessee.
Now in the First appeal before the National Faceless Appeal Centre (NFAC), the ld. CIT (A) has upheld the reduced FTC by relying on the provisions of Rule 128(9) of the Income-tax Rules, 1962 and holding that filing of Form 67 should be before the due date of filing of original return under section 139(1) of the Act is a mandatory condition for availing FTC. He further held that certain relaxations have been made subsequently but same would not be applied for the year under consideration and ld. AO does not have discretion to condone delay in filing Form 67. In support, he has also referred to the decision of Hon’ble High Court in the case of Little Angels Education Society Vs Union of
4 ITA No.1202/Mum/2023 M/s. Deloitte India Advisory Services Pvt. Ltd India 434 ITR 423 which was in the context of claiming of audit report in form 10B for the purpose of Section 12A(b). 6. Now, the issue before us is whether assessee entitled to get credit of additional FTC of Rs.1,34,86,569 claimed in the revised return. 7. We have heard both the parties and perused the relevant finding given in the impugned order. Section 90 & 91 of the Act provides grant of credit against taxes payable in India for taxes paid in foreign countries in terms of DTAA entered into in pursuant to Section 90(2). The Section per se or the DTAA does not provide for any disallowance of FTC if it is not claimed by a particular date, in fact it has been mandated the FTC has to be given if the income has been shown and declared in ROI in India. Section 295(2)(ha) of the Act authorizes CBDT to make rules for providing the procedure for granting of relief or deduction of any income tax paid in any country or specified territory outside India under sections 90 or 90A or 91 against the income tax payable under the Act. This provision has been brought in Rule 128 of IT Rules. The said rule provides that assessee has to file form No.67 on or before the due date specified u/s. 139(1) which ld. CIT (A) has held that it is a mandatory requirement. Before us, ld. Counsel had cited various decisions of the Tribunal which in sum and substance are as under:-
i. Ms. Brinda RamaKrishna v. ITO (2022] 193 ITD 840 (Bangalore ITAT)
5 ITA No.1202/Mum/2023 M/s. Deloitte India Advisory Services Pvt. Ltd The assessee claimed FTC under section 90 in the revised return of income filed for the AY 2018-19 on 31 August 2018 but did not file Form 67 by oversight. On realizing the same, she filed Form 67 on 18 April 2020. The CPC disallowed the FTC claim, which was upheld by the appellate authority. The Hon'ble ITAT held that (i) rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No. 67; (ii) filing of Form No. 67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. ii. Sonakshi Sinha vs CIT (2022] 197 ITD 263 (Mumbai ITAT) The assessee filed Form 67 on 20.01.2020 during the course of assessment proceedings. FTC credit was disallowed on the ground that the appellant had failed to comply with Notification No. 9 dated 19 September 2017 as well as provisions of Rule 128(9). The Tribunal relying on the Bangalore Tribunal decision in case of Ms. Brinda Ramakrishna v. ITO (supra) held that assessee was eligible for FTC. The Tribunal held that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. iii. Mr. Bhaskar Dutta v. DCIT(A) [2023] 147 taxmann.com 481 (Delhi ITAT) The assessee filed Form 67 on 31 May 2021 even though due date of filing the return of income was 30-7- 2020. FTC credit was disallowed on the ground that Form 67 was not filed before the due date of filing return of income relying on Rule 128 and Notification dated 19-9-2017. Following the decisions of coordinate benches in case of Ms. Brinda Ramakrishna v. ITO [2022] 193 ITD 840 (Bang) and Sonakshi Sinha v. CIT [2022] 197 ITD 263 (Mum), the Tribunal held that the FTC was allowable. List of other cases have also been filed by various Benches of the Tribunal all across the Country, wherein similar view has been
6 ITA No.1202/Mum/2023 M/s. Deloitte India Advisory Services Pvt. Ltd taken that delay in filing of Form 67 cannot be the reason for disallowing foreign tax credit. 8. However, without going into the aspect, whether Form 67 can be filed belatedly for claiming the foreign tax credit or not, here in this case assessee has filed the revised Form 67 alongwith revised return of income filed u/s.139(5). The revised return has been accepted by the ld. AO and once that is so, then the revised return is superseded by the original return of income and therefore, it has to be reckoned that any claim or relief available in terms of due date prescribed u/s. 139(1), same shall consequently will follow in the revised return which has been accepted and has to be reckoned as return of income filed within due date. Thus, once revised return has been filed within time and has been accepted by the ld. AO, then it cannot be treated that there is a delay in filing of From 67 and that has not been filed within due date of Section 139(1). 9. Now the amendment has been made in sub-Rule 9 of Rule 128 vide notification dated 18/08/2022 wherein it has been provided that the statement in form No.67 shall be furnished on or before the end of the assessment year and the return of income has been filed in the time specified u/s.139(1) or 139(4). Though this provision has been brought from the subsequent year, however, rationale can be drawn that the statute never intended to deny any credit for foreign taxes paid once the foreign income has been shown and declared in the return of income file. A revised return can be filed u/s.139(5) only if the
7 ITA No.1202/Mum/2023 M/s. Deloitte India Advisory Services Pvt. Ltd person has furnished the return u/s.139(1) or u/s.139(4) only if he discovers any omission or any wrong statement, then statute provides to furnish revised return within the time limit prescribed therein and once the revised return has been filed which has been accepted, then it has to be treated as return filed within due date. Thus, ld. CIT(A) has erred in law and on facts, thus, the authorities below erred in law and on facts in denying the foreign tax. Accordingly, we direct the ld. AO to allow the credit of foreign tax.
In the result, appeal of the assessee is allowed. Order pronounced on 29th August, 2023.
Sd/- Sd/- (PADMAVATHY S) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 29/08/2023 KARUNA, sr.ps
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,
(Asstt. Registrar) ITAT, Mumbai