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Income Tax Appellate Tribunal, PATNA BENCH,
Before: Shri Rajpal Yadav & Dr. Manish Borad
Kumar Saurabh ………. Appellant Aravalli Apartment, Flat 3A, 170/1J, NSC Bose Road, Naktala S.O. Kolkata-700047. (PAN: CSNPS4186G) Vs. Income Tax officer, Wd-4(1), Patna ………… Respondent Appearances by: Ms. Vijeta Untwalia Agarwal, CA appeared for Appellant. Shri Ashwani Kumar, Sr. DR. appeared for Respondent. Date of concluding the hearing : 11.09.2024 Date of pronouncing the order : 26.09.2024 ORDER
Per Dr. Manish Borad, Accountant Member:
This appeal filed at the instance of the assessee pertaining to the Assessment Year (in short “AY”) 2019-20 is directed against the order passed u/s 250 of the Income Tax Act, 1961 in short the “Act”) by Ld. Commissioner of Income-tax, (Appeals), NFAC, Delhi [in short Ld. “CIT(A)”] dated 12.10.2023 arising out of the rectification order framed u/s. 154 of the Act by ADIT, CPC, Bengaluru dated 16.06.2021 .
Grounds of appeal raised by the assessee read as under:
“1) That the order passed by the Hon'ble Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre ("NFAC"),u/s 250 of the Income Tax Act, 1961 on dated 12/10/2023, by upholding the rectification order passed u/s 154 of The Income Tax Act, 1961 by the Ld. Asst. Director of Income Tax, CPC, Bengaluru is contrary to the law and facts of the case, hence liable to be quashed. 2) That the NFAC, has erred in upholding the non-granting of the foreign tax credit of Rs. 349,286/- as claimed in the return of income by the appellant, as he is an employee of State Bank of India and tax has been deducted on salary and TDS certificate has been issued by State Bank of Germany. 3) That the appellant bona fide submitted Form-67 duly filled up all the particulars, so the appellant should not be penalized on this ground. 4) That the NFAC erred in law and facts of the case by upholding the enhancement of interest u/s 2348 and 234C of the Act, since once the foreign tax credit is given, there will no demand. 5) That the NFAC erred In not granting proper, sufficient and adequate opportunity of being heard to the Appellant while passing the appellate order, hence it is against the principles of natural justice. 6) That the appellant be allowed to add/alter/amend/delete either, all or any of the grounds of appeal either before or at the time of hearing.”
3. At the outset, Ld counsel for the assessee submitted that the revenue authorities erred in not granting the Foreign Tax Credit (FTC) solely on account of for delay in furnishing Form 67. Referring to the decision of this Tribunal in the case of Vineet Bahety Vs. ITO, & 1267/Kol/2023 dated 06.02.2024, she stated that the case of the assessee is squarely covered by the said decision of this Tribunal and that the assessee is entitled to get alleged FTC.
On the other hand, Ld. DR vehemently argued but failed to controvert the contention made by the Ld. Counsel by placing any other binding precedent in favour of the revenue.
We have heard rival submissions and perused the material placed before us. We notice that the assessee is a resident Page 2 of 6 individual and working for at State Bank of India and during the year under consideration assessee was working at SBI, Germany. On the salary given to the assessee, tax at source was deducted by SBI Germany. In the income tax return assessee has claimed FTC of Rs.3,49,286/- but for the FTC assessee is required to furnish Form 67 filled up with all particulars and is to furnished before due date specified for furnishing the income tax return u/s. 139(1) of the Act. However, Form 67 filed on 26.05.2021 which is after the due date. We, however, taking note of the fact that the said delay was on account of technical difficulties faced by the tax payers for filing Form 67 on the Income Tax portal. Even otherwise, case of the assessee is squarely covered by the decision of this Tribunal in the case of Vineet Bahety (supra) wherein the Tribunal has held as under: “6. We have heard rival contentions and perused the records placed before us. Disallowance of foreign tax credit for A Y 2019-20 & AY 2020-21 for late filing of Form-67 is in dispute before us. The assessee earned income from Indonesia and claimed foreign tax credit. Except for the delayed uploading of Form-67 no other discrepancy has been noticed by the Revenue authorities for allowing of foreign tax credit. This issue has come for our consideration on various occasions and it has been consistently held that filing of Form-67 is directive in nature and not mandatory and therefore, just for the sake of delay in filing of Form-67, the assessee should not be denied the claim of foreign tax credit. In one of the decisions of this Tribunal in the case of Sobhan Lal Gangopadhyay Vs. ADIT [ITA No. 782/Kol/2022] relevant finding of this Tribunal reads as follows: "4. We have heard rival contentions and perused the material placed before us.
5. We observe that the assessee is an individual and filed return of income on 06/10/2020 for Assessment Year 2020-21 declaring income of Rs.42,35,370/-. During the year under consideration, the assessee has claimed to be out of India for employment in South Korea from 16/04/2018 to 08/09/2019 under the assignment with Tata Daewood Commercial Vehicle Company Ltd. The fact about the assessee being outside India from 16/04/2018 to 08/09/2019, is not in dispute before us. In the return of income, assessee has Page 3 of 6 claimed relief u/s 90 of the Act at Rs.3,50,106/- being tax paid in Republic of Korea. In the return processed u/s 143(1)(a) of the Act, the said claim of relief u/s 90 of the Act was not provided to the assessee on account of the reason that the prescribed Form No. 67 read with Clause 8 of Rule 128, was not filed belatedly i.e., after the due date of filing return u/s 139(1) of the Act. For this very reason that Form No. 67, was not filed before the due date of filing of return, the said claim was denied.
6. Before us, Id. Counsel for assessee referred to the decision of the Coordinate Bench in the case of Sonakshi Sinha (supra), wherein it has been held that filing of Form No. 67 is directory in nature and not mandatory. Relevant extract of the Tribunal's decisions is reproduced hereunder:- "011. The learned authorised representative submitted that honourable Supreme Court was seized of the matter where in the same subsection twin conditions were mentioned the honourable High Court and lower appellate authorities considered one of the condition as mandatory and one of the condition as directory. He submitted that here section 90 or 91 does not lay down any condition of filing any form. The requirement of filing of the form is provided under rule 128 of The Income Tax Rules. Therefore here the situation is quite different. He submitted that these conditions have been considered by the coordinate bench in case of Brinda Ramakrishna.
We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128(9) of the Income Tax Rules on or before the due date of filing of the return of income not complied by the assessee but same was filed before the completion of the assessment proceedings. Precisely the fact shows that assessee filed return of income u/s 139(1) of the income tax act. In such a return of income she claimed the foreign tax credit. However form number 67 was filed during the course of assessment proceedings and not before the due date of filing return.” Rule 128 (9) of the Income Tax Rules 1962 provides that the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore - Trib.) wherein following its Page 4 of 6 earlier order in the case of Ms. Brinda Rama Krishna vs. ITO [2022] 135 taxrnann.com 358 (Bang - Trib) it was held that one of the requirements of Rulel28 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory rather it is directory in nature. This is because Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.
Same view is also taken by a coordinate division bench in Vinodkumar Laksbmipathi V CIT(A) NFAC 06.09.2022. It is well settled 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. Admittedly Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022 the assessee can file such form number 67 on or before the end of the assessment year. Therefore legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule which does not provide for any consequence if not complied with. Therefore respectfully following the decisions of the coordinate bench on this issue we hold the assessee is eligible for foreign tax credit as she has filed form number 67 before completion of the assessment though not in accordance with rule 128 (9) of The Income Tax Rules which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly ground number 2 of the appeal of the assessee is allowed.”
Respectfully following the above decision of the coordinate bench on which squarely applicable on the facts of the instant case, we hold that the assessee is eligible for foreign tax credit of Rs.3,49,286/- as he has filed a valid form number 67 for claiming FTC for the tax deducted at source on the salary received from SBI ,
Page 5 of 6 Germany. Accordingly grounds of appeal raised by the assessee are allowed.