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Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri K. Narasimha Chary
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri K. Narasimha Chary, Judicial Member Assessment Year: 2021-22 Shri Pakala Shailendra Vs. Income Tax Officer Prasad, Gachibowli, Ward 4(1) Hyderabad Hyderabad PAN:ARRPP7336G (Appellant) (Respondent) Assessee by: Shri Ravi Bharadawaj, CA Revenue by: Shri Kumar Aditya, DR Date of hearing: 30/05/2023 Date of pronouncement: 31/05/2023 ORDER Per R.K. Panda, A.M This appeal filed by the assessee is directed against the order dated 16/12/2022 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2021-22.
There is a delay of 57 days in filing of this appeal by the assessee for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. It has been explained therein that the order of the CIT (A)/NFAC was received on 16.12.2022 and the assessee filed the appeal before the Tribunal through online in prescribed Form No.36 along with all required enclosures on 15/02/2023 which is within time. However, the physical copies of acknowledgment Page 1 of 5
ITA 210 of 2023 Pakala Shailendra Prasad along with all enclosures were submitted with the ITAT on 12/04/2023. The assessee requested the Bench to consider the date of filing of the appeal as 15.2.2023 and condone the delay in submission of the physical forms in the office of the ITAT. After hearing both sides and after considering the contents of the condonation petition along with affidavit, the delay in filing of this appeal is condoned and admitted for adjudication.
Although a number of grounds have been raised by the assessee, however, these all relate to the denial of Foreign Tax Credit (FTC) due to delay in filing of Form No.67 beyond the prescribed time limit u/s 139(1) of the I.T. Ac.t
Facts of the case, in brief, are that the assessee is an individual and filed his return of income for the A.Y 2021-22 on 24.02.2021. The source of income was from: A) Income from salaries - Rs. 9,36,309 B) Capital Gain from Trading of shares: Rs. 6,79,307 C) Interest & Dividend Income Rs. 5,01,939 D) Foreign Income Rs.1,45,11,957
The assessee had filed his US Income Return and paid the taxes accordingly. While filing the Indian Income Tax Return, the assessee disclosed the above aforementioned foreign income and claimed Foreign Tax Credit which was paid in USA and accordingly filed Form No.67 on 24.2.2022. The CPC Bengaluru vide intimation u/s 143(1) dated 10.11.2022 did not consider the FTC while processing the ITR.
Aggrieved with such order of the AO/CPC, the assessee filed appeal before the CIT (A) and the learned CIT Page 2 of 5
ITA 210 of 2023 Pakala Shailendra Prasad (A)NFAC vide order dated 16.12.2022 dismissed the appeal filed by the assessee holding that the assessee has not complied with the mandatory condition as mentioned in sub-rules (8) & (9) of Rule 128 of the IT Rules and the delay in submission of Form 67 does not stand condoned.
7. Aggrieved with such order the learned CIT (A) NFAC, the assessee is in appeal before the Tribunal.
8. The learned Counsel for the assessee referring to various decisions including the decision of the Coordinate Bench of the Tribunal in the case of Shri Baburao Atluri vs. DCIT in and 118/Hyd/2022 for the A.Ys 2018-19 and 2019-20 order dated 22.07.2022 submitted that an identical issue had come up before the Tribunal and the Tribunal has allowed FTC even though there was delay in filing of the same beyond the due date of filing of the return. He submitted that the Tribunal while allowing such FTC has relied on various other decisions. He accordingly submitted that this being a covered matter in favour of the assessee, the FTC should be allowed to the assessee.
The ld DR, on the other hand, relied on the order of the CIT (A)-NFAC.
We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A)/NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO /CPC in the instant case did not allow FTC on the ground that Form 67 has been filed on 24.2.2022 which is beyond the statutory due date of filing of the return. We find the Page 3 of 5
ITA 210 of 2023 Pakala Shailendra Prasad CIT(A)/NFAC upheld the action of the AO/CPC on the ground that the assessee has not complied with the mandatory condition as mentioned in sub-rule (8) and (9) of the Rule 128 of the I.T. Rules and the delay in submission of Form 67 does not stand condoned. We find an identical issue had come up before the Tribunal in the case of Baburao Atluri vs. DCIT (Supra) and the Tribunal vide order dated 22.07.2022 while deciding the issue in favour of the assessee has observed as under:
“10. We have heard the rival arguments made by both the sides, perused the orders of the AO and NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case did not allow the Foreign Tax Credit (FTC) on the ground that Form No.67 has been filed beyond the due date of filing of the return. We find the NFAC upheld the action of the AO, the reasons of which have already been reproduced in the proceeding paragraph. It is the submission of the ld.Counsel for the assessee that filing of foreign tax credit certificate in Form-67 is directory in nature Baburao Atluri and not mandatory and therefore the NFAC is not justified in denying the Foreign Tax Credit.
We find the Bangalore Bench of the Tribunal in the case of M/s. 42 Hertz software India Pvt.Ltd(supra) while deciding an identical issue has held that FTC cannot be denied to the assessee, where the assessee filed FTC in Form No.67, although belatedly since filing of such Form 67 is not mandatory but directory in nature. The relevant observation of the Tribunal from para 6 onwards reads as under:- "6. There is no dispute that the Assessee is entitled to claim FTC. On perusal of provisions of Rule 128 (8) & (9), it is clear that, one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, 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.67. This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms.Brinda Kumar Krishna vs.ITO in by order dated 17/11/2021.
It's a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. reported in (2021) 432 ITR 471.
We accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the ITA 210 of 2023 Pakala Shailendra Prasad
supporting documents filed by assessee. Accordingly the grounds raised by assessee stands allowed for statistical purposes."
12. We further find, in the instant case, the delay in filing of the FTC certificate in Form-67 was explained to be due to non receipt of the tax deduction certificate form the foreign deductor from Zambia within time for which the said Form-67 was filed belatedly by 14 days. It was stated that the tax jurisdiction of the Zambian deductor follow different period for taxing the income and have different due dates for filing the return as compared to India. So Baburao Atluri far as the decision relied on by ld. DR in the case of Muralikrishna Vaddi(supra) is concerned, we find there is a delay of more than two years without any valid and reasonable cause. Therefore, the said decision in our opinion cannot be applicable to the facts of the present case. In any case, when there are two view possible, the view which is favourable to the assessee has to be followed as held by Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. reported in (1972) 88 ITR 192. Since, the assessee in the instant case has filed FTC certificate in Form No.67 with delay of only '14' days, therefore following the decision of the Bangulur Bench of the Tribunal in the case of M/s. 42 Hertz Software India Pvt.Ltd.(supra), we direct the AO to allow the FTC after due verification. The grounds raised by the assessee are accordingly allowed.”
11. Since the facts of the instant case are identical to the facts of the case already decided by the Tribunal cited (Supra), respectfully following the said decision, we direct the AO to allow the FTC after due verification. The grounds raised by the assessee are accordingly allowed.