GOVINDA RAJULU DHONDU,HYDERABAD vs. ACIT, CIRCLE-12(1), HYDERABAD
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Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri K. Narasimha Chary
Per R.K. Panda, A.M
This appeal filed by the assessee is directed against the order dated 30.12.2022 of the learned CIT (A)-NFAC, Delhi relating to A.Y.2019-20.
Facts of the case, in brief, are that the assessee is an individual deriving income from salary, income from house property and other sources. The assessee also derived income from Capital Gain in respect of property situated in USA. For the assessment year 2019-20, he filed his return of income in ITR-2 admitting total income of Rs. 6,18,77,640/- which includes Long Term and Short-Term capital gain derived outside India (in USA) amounting to Rs.9,95,529/- and Rs.2,00,63,505/- respectively as
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shown in the ITR -2 (Page No.23) and computation statement annexed thereto. The assessee originally offered the said capital gain in the return of income filed before the Authorities concerned in USA and paid tax equivalent to Indian Rupee of Rs.58,69,594/. Copy of the return of income filed in USA was also submitted. The assessee while filing the return of income in ITR-2 claimed tax credit for 58,69,594/- as per the computation statement. The return of income filed by the assessee was processed u/s 143(1), of the I.T. Act vide intimation dated 23/01/2021 by the CPC wherein a demand of Rs. 77,84,180/- was arrived at by the CPC. While doing so, the CPC disallowed the relief of Rs.58,69,594/- representing tax credit claimed u/s 90/90A of the I.T. Act.
As the disallowance of relief claimed u/s 90/90A is a mistake apparent from record, the assessee filed an application u/s 154 on 19.08.2022 before the Assessing Officer requesting for rectification. However, the Assessing Officer vide order passed /s 154 of the I.T. Act dated 15.11.2022 rejected the request for rectification of intimation on the ground that Form 67 was filed beyond the due date i.e. 31.8.2019. The Assessing Officer noted that the assessee filed Form 67 on 28.1.2021 claiming tax credit of RS.60,45,572/-. Later, the assessee filed a revised Form 67 on 26.03.2021 rectifying the claim to Rs.58,69,594/- by paying the differential tax and interest thereon.
In appeal, the learned CIT (A) upheld the action of the Assessing Officer by observing as under:
“5.1 T have carefully considered the AO rectification order u/s 154 of the Act passed by Rule and E-submission filed by appellant. It is seen that under section 295(2)(ha), 128 is framed to provide for the mechanism for grant of foreign tax credit to Indian resident. Rule 128(8) and 128(9)
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provides as under: (8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee, namely:- (i) a statement of income from the country or specified territory outside India offered for tax for the previous year and of foreign tax deducted or paid on such income in Form No. 67 and verified in the manner specified therein;
(ii) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee,
(a) from the tax authority of the country or specified territory outside India, or
(b) from the person responsible for deduction of such tax; or
(c) signed by the assessee:
Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by:-
(A) an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee:
(B) proof of deduction where the tax has been deducted.
(9) 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.
It is seen that the appellant did not furnish form number 67 before the due date as provided under section 139(1) in compliance to rule 128(9) quoted above. Thus, foreign tax credit could not have been allowed as per rule 128(9). It is further seen that certificate or the statement specifying the nature of income as per Rule 128(2)(ii) above for income provided in form 67 is also not furnished tallying the same (as per said certificate/statement) with the figure shown in form 67 before the due date u/s. 139(1). In view of the above, appellant's claim of relief for foreign tax credit is held to be rightly denied. Accordingly, Grounds No. 1 to 5 of Appeal are dismissed.”
Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds:-
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The learned Counsel for the assessee at the outset drew the attention of the Bench to the following decisions where Foreign Tax Credit has been allowed even though the certificate in Form 67 has not been filed along with the return of income:
1) ITAT Hyderabad in the case of Baburao Atluri vs. DCIT in ITA Nos.108 & 118/Hyd/2022 2) ITAT Bangalore in the case of Sri Brinda Ramakrishna vs. Income Tax Officer in ITA No.454/Bang/2021
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3) ITAT Bangalore in the case of Shri Vardhan Vishwanath Vijaya vs. Income Tax Officer in ITA 379/Bang/2022. 4) ITAT Bangalore in the case of M/s. 42 Hertz Software India (P) Ltd vs. ACIT in ITA No.29/Bang/2021. 5) ITAT Mumbai Bench in the case of Sonakshi Sinha vs. CIT(A) NFAC in ITA No.1704/Mum/2022. 6) ITAT Bangalore Bench in the case of Shri Sunkesulapati Sumanth vs. Income Tax Officer in ITA 6/Bang/ 2021.
6.1 Referring to the decision of the Coordinate Bench of the Tribunal in the case of Shri Baburao Atluri vs. DCIT in ITA No.108/Hyd/2022 and ITA No.118/Hyd/20202 for the A.Ys 2018- 19 & 2019-20 order dated 22.07.2022, he submitted that under identical circumstances, the Tribunal has allowed the foreign tax credits, although there was a delay in filing Form No.67 beyond the due date of filing of the return.
The learned DR, on the other hand, heavily relied on the order of the learned 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 in the instant case rejected the 154 rectification application on the ground that Form No.67 was not furnished before the due date as provided u/s 139(1) in compliance to Rule 128(9). We find the learned CIT (A) NFAC upheld the action of the Assessing Officer in denying the relief for foreign tax credit, the Page 5 of 9
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reasons of which have already been reproduced in the preceding paragraph. We find an identical issue had come up before the Coordinate Bench of the Tribunal in the case of Shri Baburao Atluri (Supra) wherein the Tribunal, after considering various decisions, has allowed the foreign tax credit, although there was delay in filing of such Form 67 beyond the due date of filing of the return. Relevant observation of the Tribunal from Para 10 onwards read 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 ITA no.454/Bang/2021 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
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in respect of the supporting documents filed by assessee. Accordingly, the grounds raised by assessee stands allowed for statistical purposes."
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 Bangalore 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.”
Since the facts of the instant case are identical to the facts of the present case, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal, we direct the Assessing Officer to allow the foreign tax credit of Rs.58,69,594/- after due verification. Grounds raised by the assessee are accordingly allowed.
So far as the ground relating to levy of interest u/s 234B & 234C are concerned, the same is mandatory and consequential in nature. Accordingly, the ground challenging the levy of interest u/s 234B & 234C is dismissed.
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In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the Open Court on 11th May, 2023.
Sd/- Sd/- (K. NARASIMHA CHARY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 11th May, 2023 Vinodan/sps
Copy to:
S.No Addresses 1 Shri Govinda Rajulu Dhondu, Plot No.87 IVRCL Hillridge Villas, Gachibowli, Hyderabad 500032 2 ACIT Circle 12(1) Aayakar Bhavan, Opp: LB Stadium, Basheerbagh, Hyderabad 3 Pr. CIT-, Hyderabad 4 DR, ITAT Hyderabad Benches 6 Guard File
By Order
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