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Income Tax Appellate Tribunal, “SMC - C” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN
O R D E R This is an appeal by the assessee against the order dated 17.11.2022 of NFAC, Delhi, relating to Assessment Year 2019-20.
The assessee is an individual. The assessee filed return of income for Assessment Year 2019-20 on 29.08.2019. In the return, the assessee claimed foreign tax credit in respect of a sum of Rs.3,30,000/-. During the previous year, the assessee earned income in USA and had paid taxes in USA in respect of income so earned. It is not in dispute that in terms of Double Taxation Avoidance Agreement (DTAA) between India and USA r.w.s. 90 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), the assessee is entitled to claim credit for taxes paid in USA on the income earned in USA, which is again taxed in India. The claim was rejected by the AO in intimation passed under section 143(1) of the Act dated 23.03.2021 on the ground that in terms of Rule 128 of the Income Tax Rules, 1962 (hereinafter called ‘the Rules’), the assessee was required to file Form 67 for claiming FTC on or before the due date of furnishing return of income under section 139(1) of the Act. It is undisputed that the assessee filed Form 67 on 26.10.2019 after the due date of filing the return of income mentioned under section 139(1) of the Act but before the intimation under section 143(1) of the Act dated 23.03.2021. The CIT(A) confirmed the order of the AO on the same reasoning given by the AO for refusing to give credit for foreign taxes paid.
Aggrieved by the order of the NFAC, assessee has preferred the present appeal before the Tribunal. It was undisputed by the parties before us that the issue sought to be adjudicated by the assessee in this appeal has been considered and decided by the ITAT, Bengaluru Benches, in the following cases:
Brinda RamaKrishna vs. TO [ITA. No. 454/Bang/2021 Assessment Year: 2018-19 Vinodkumar Lakshmipathi vs. CIT(A) IT APPEAL No. 680 (BANG.) OF 2022 / [2022] 145 taxmann.com 235 (Bangalore Trib.)[06-09-2022] 4. In the aforesaid decisions, the Tribunal took the view that in terms of section 90 of the Act read with the relevant provisions of DTAA between India and the country in which foreign taxes were paid, credit has to be allowed for taxes paid abroad. The Tribunal held that Rule 128 of the Rules cannot override the provisions of DTAA and impose an additional condition that credit will not be given if Form 67 is not filed on or before the due date of filing the return of income as prescribed under section 139(1) of the Act. The Tribunal also took the view that even Rule 128 of the Rules does not provide that if Form 67 is not filed within the stipulated time, relief under section 90 of the Act would be denied. The Tribunal also held that filing of Form No.67 is only a procedural and directory requirement and not mandatory requirement for claiming credit for foreign taxes paid.
In the light of the aforesaid decision of the Tribunal and in the light of the undisputed fact that Form 67 was filed by the assessee prior to the intimation under section 143(1) of the Act issued by the AO on 23.03.2021, the assessee is entitled to credit for foreign taxes paid and the AO is directed to allow the claim of the assessee in this regard.
In the result, appeal of the assessee is allowed.
Pronounced in the open court on the date mentioned on the caption page.