BHAGYA ADAVEESH AJAIKUMAR,MYSORE vs. ADIT, CPC, BENGALURU

These two appeals filed by the assessee are directed against the orders of NFAC/CIT(A), Delhi dated 23.9.2022 for the assessment years 2019-20 & 2020-21. The impugned order was originated from the ADIT,CPC passed u/s 143(1) of the Act.

1. The impugned intimation passed by the learned assessing officer under section 143(1) of the Acts without jurisdiction, without providing reasons for the adjustments made, opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case and bad in law.

2. The learned assessing officer erred in denying eligible claim of relief made by the appellant in its return of income under section 90 of the Act read with India USA double taxation avoidance agreement, for an amount of Rs.1,55,652. 3. The learned assessing officer is not justified in determining refund due of Rs.10,638 as against Rs.1,58,400 claimed by the appellant after claiming relief under section 90 of the Act amounting to Rs.1,55,652 on the facts and circumstances of the case. 4. The learned Commissioner of Income-tax (Appeals) erred in holding that Rule 128(8) and 128(9) of Income-tax Rules,1962 ("the Rules") have not been complied by the appellant. 5. The learned assessing officer and Commissioner of income-tax (Appeals) erred in not taking note of the fact that certificate or statement as per Rule 128(8)(ii) along with proof of payment of taxes has been submitted as an attachment to Form 67 and also as part of appeal documents/submission before Commissioner of Income-tax (Appeals) and hence appellant is eligible for relief under section 90 of the Act. 6. The learned assessing officer and Commissioner of income-tax (Appeals) erred in not appreciating that amendment was introduced in Rule 128(9) extending the time limit for filing of Form 67 till the end of assessment year, to alleviate hardship to taxpayers and hence such amendment should be applied retrospectively to grant relief under section 90 of the Act. 7. The learned Commissioner of income-tax (Appeals) is not justified in denying claim of relief under section 90 on the ground that requisite documents have not been furnished by the appellant (i) without issuing a 'show-cause notice' on this issue; (ii) without providing the appellant an opportunity to clarify its position on the issue involved, which are against the principles of natural justice. 8. Learned assessing officer and Commissioner of Income-tax (Appeals) ought to have appreciated that compliance with Rule 128 is a procedural / directory requirement and is not a mandatory requirement. 9. Learned assessing officer and Commissioner of Income-tax (Appeals) erred in not appreciating that foreign tax credit is Appellant's vested right as per Article 25(2)(a) of India USA double taxation avoidance agreement read with Section 90 and same cannot be disallowed for non-compliance of procedural requirement prescribed in the Rules.

Page 3 of 5 10. Learned assessing officer and Commissioner of Income-tax (Appeals) ought to have appreciated that provisions of double taxation avoidance agreement override the provisions of the Act, to the extent they are more beneficial and hence, credit of foreign taxes under India USA double taxation avoidance agreement cannot be denied for noncompliance, if any with provisions of Rule 128. 11. Notwithstanding and without prejudice to above grounds of appeal

, the order of intimation passed by the learned assessing officer under section 143(1) of the act is without jurisdiction since non granting of relief under section 90 of the Act is not covered under any of the conditions as envisaged in the provision of section 143(1) of the. Act. 12. learned assessing officer erred in charging interest under section 234B of Rs.6,185 and section 234C of Rs.6,250 which are consequential to denial of relief under section 90 of the Act.

13. Learned assessing officer ought to have appreciated that levy of interest under section 234B and 234C are bad in law as the period, rate, quantum and method of calculation of interest are not discernible from the intimation under section 143(1) of the Act.

14. For these and other grounds that may be urged at the time of hearing, it is prayed that assessing officer may be directed to grant relief under section 90, delete interest levied under section 234B and 234C and the appeal may be allowed in the interest of justice and equity.

4. Brief fact of the case is that impugned order of intimation was passed U/s 143(1) by the ADIT, CPC by rejecting the assessee’s refund amount of Rs. 1,58,402/- & had restricted amount of Rs. 10,638/-. The assessee is resident of India earning Income which are text in United States of America (in short USA). For the impugned assessment year, the assessee had earned Rs. 10,07,789/- and same had been taxed by USA. The assessee has provided the proof of payment of tax in USA along with the form 67 for claiming the tax credit under section 90 of the act. The assessee has unintentional delay for filing return in USA & finally filed form 67 on 04/06/2019. After filing return in USA the assessee revised the foreign income and filed return U/s 139(5) in consequence of original return filed U/s 139(1) of the Act. The ADIT,CPC had considered the relief claimed by Page 4 of 5 assessee U/s 90 of Act. Aggrieved assessee filed the appeal before the CIT(A). The CIT(A) upheld the order of assessing authority. Being aggrieved the assessee filed an appeal before us.

5. The Counsel for assessee argued that the issue is already covered & referred the orders of Coordinate Bench of ITAT, Bangalore.

6. The DR only relied on the order of revenue authority.

“16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold 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. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s. 154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s. 154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s. 154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.

17. In the result, the appeal is allowed.” 7.1. The Counsel further relied on. Ms. Brinda RamaKrishna v. Income-tax Officer [2022] 135 taxmann.com 358 (Bangalore - Trib.) where it was held as under:-

“16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in &1067/Bang/2022 Bhagya Adaveesh Ajaikumar, Mysore Page 5 of 5 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. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and, in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.