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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: Shri Rama Kanta Panda & Shri Laliet Kumar
This appeal is filed by the assessee, feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 02.08.2022 for the AY 2020-21 on the following grounds :
“a. The commissioner ought to have allowed the delayed form 67 as additional evidence in support of the claim for credit of taxes paid in Malaysia as made in the income tax return and directed the assessing officer to consider the same and to pass suitable orders. b. The commissioner (appeals) ought to have appreciated that form 67 was filed and rectification was sought u/sec 154 and which ought to have been considered as the claim was rightfully made in the original return also. c. The commissioner ought to have accepted the submission made by the assessee that the delayed filing of form 67 is not fatal to the claim of tax credit as the same is governed by the provisions of DTAA and there is no provision in the DTAA that the tax credit shall not be allowed if the procedures laid down in the income tax act are not complied with. The commissioner appeals ought not to have completely ignored this submission. d. The Commissioner (appeals) ought to have appreciated that the income tax officer ought to have followed the CBDT circular No. 14(XL-35) dated 11/04/1955 in facilitating the legitimate claim of the assessee to collect the taxes justly and that therefore the disallowance of credit for taxes u/sec 90 and DTAA without any show cause notice on the basis of delay/ Non filing of form 67 is a complete miscarriage of justice especially when the same was claimed in the income tax return. e. It is prayed that it is within the power of the Income tax appellate tribunal to entertain even a new claim / evidence as per law as has been held by various judicial pronouncements and on such basis also it is humbly prayed the.AO should be directed to consider the form 67 filed belatedly and allow the deduction u/sec 90.”
The appeal filed by the assessee is barred by limitation by 24 days. He has moved a condonation petition explaining reasons thereof. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing.
Facts of the case, in brief, are that assessee filed this appeal against the order dt.15.12.2021 passed by ACIT/DCIT CPC, Bangalore (hereinafter referred to as “Assessing Officer”) as the Assessing Officer had disallowed foreign tax credit due to non-filing of form 67 along with income tax return, without giving any show cause notice.
Feeling aggrieved with the order dt.15.12.2021 passed by the Assessing Officer, assessee filed the present appeal which was later migrated to the Ld. CIT(A), NFAC, Delhi, who dismissed the appeal of assessee at page 4 of his order held as under :
“6.1………… It is seen that 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, ground nos. 1 to 4 of appeal are dismissed.”
Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.
Before us, ld. AR for the assessee had submitted that the assessee had filed for rectification u/s 154 of the Act before the Assessing Officer for reconsideration, after knowing the disallowance of foreign tax credit to him due to non filing of form 67 along with income tax return. Thereafter, rectification order was passed on 25.02.2022 by disallowing the foreign tax credit. Ld. AR further submitted that ld.CIT(A) should consider that the delayed filing of form 67 is not fatal to the claim of tax credit, as the same is governed by the provisions of DTAA and further submitted that the Assessing Officer ought to have followed the CBDT circular No. 14(XL-35) dated 11/04/1955 in facilitating the legitimate claim of the assessee and that the disallowance of credit for taxes u/sec 90 and DTAA without any show cause notice on the basis of delay / Non filing of form 67 cause injustice particularly when the same was claimed in the income tax return.
7. Per contra, the ld.DR strongly relied on the orders of lower authorities.
We have heard the rival submissions and perused the material on record. After having gone through the facts of the present case, we are of the view that there is no dispute that assessee is entitled to claim relief under section 90 of the IT Act but here the disallowance was confirmed on the sole ground that the relevant form 67 prescribed under section 128(8) was not filed within the time stipulated under sub rule 9 of Rule 128. We further find that an identical issue arose before the Co-ordinate Bench of this Tribunal in the case of Baburao Atluri Vs. DCIT, Circle -1, Khammam (ITA No.108/Hyd/2022 dt.22.07.2022), wherein the co- ordinate Bench of the Tribunal had allowed the appeal of the assessee by holding 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 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.
8. 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 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.
In view of the above discussions and in view of the support drawn from the decision of Co-ordinate Bench of this Tribunal in the case of Baburao Atluri (supra), we direct the Assessing Officer to allow the foreign tax credit claimed by the assessee after due verification. Further, we do not find any material on record to demonstrate that the order of Tribunal in the case of Baburao Atluri (supra) has been set aside / stayed / overruled by any higher judicial forum. Accordingly, the appeal of assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 15th March, 2023.