AKHILESH KUMAR YADAV,MUMBAI vs. DCIT CIRCLE 1(1)(1), DEHRADUN

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH “DB” DEHRADUN BEFORE SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.318/DDN/2026 Assessment Year: 2021-22 AKHILESH KUMAR YADAV, Vs. DCIT, D-404, Oberoi Splendor, Circle 1(1)(1), JVLR, Jogeshwari (East), Aaykar Bhawan, 13-A, Mumbai, Maharashtra 400060. Subhash Road, Dehradun, PAN No. ABCPY7074P Uttarakhand 248001. Appellant Respondent Assessee by Shri Varun Dedhia, CA Revenue by Shri Mohan Lal Joshi, Sr. DR Date of hearing: 23.07.2026 Pronouncement on 23.07.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. The ITAT Registry has reported a delay of 248 days in the filing of the present appeal. The said delay has been requested to be condoned through a detailed affidavit. Some portions from this petition deserve to be extracted as under: - ……………….

“3. Without prejudice to the merits of the case, the Appellant respectfully submits that the delay in filing the appeal was neither deliberate nor due to negligence. It arose from bona fide and unavoidable circumstances beyond the Appellant’s control as stated under: 3.1 At the outset, the Appellant is a salaried employee of a reputed multinational corporation with substantial operations in

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV India. The Appellant is a senior and is responsible for managing a strategically important business portfolio. Pursuant to organizational requirements, he manages the responsibilities which involve extensive international travel, tight professional schedules, and high-pressure responsibilities. 3.2 Given the above background of the appellant’s employment, the Appellant respectfully submits that he is not a tax expert and have always relied on qualified professionals appointed by his employer and by him to manage his Indian tax compliances, including return filing, assessments, and any litigation arising there from. For the year under consideration, the assessee was deputed on an international assisgnment to the Netherlands. In accordance with the employers’ standard policy for globally mobile employees, tax compliance and allied activities were duly managed by an advisor appointed by the employer. 3.3 Further, there was a transition in the tax advisors appointed by the employer, while the appeal before the Ld. CIT(A) had been instituted by the erstwhile tax consultant. This transition resulted in a genuine lack of clarity regarding the responsibility for further appellate action. As per the prevailing understanding during the transition phase, the outgoing tax consultant was expected to manage legacy litigation matters for a limited overlap period, whereas the incoming consultant was entrusted with ongoing compliances and new matters. 3.4 The outgoing tax consultant had duly intimated the Appellant and the Appellant’s personal Chartered Accountant regarding the pendency of the appeal before the Ld. CIT(A) and had sought further instructions. The appellant, being a layperson in tax matters and having complete faith in the professionals managing his affairs, bona fide believed that the matter would be appropriately coordinated and actioned by the concerned advisors, namely the personal Chartered Accountant and the consultant appointed by the employer. However, due to lack of effective coordination between the two professionals, coupled with the Appellant’s limited involvement arising from his reliance on them, no further action was taken by the Appellant pursuant to the said communication. 3.5 The Appellant respectfully submits that the dispute pertained to a claim of Foreign Tax Credit, which is a recurring issue in cases of globally mobile employees and had historically been addressed through rectification proceedings. The Appellant bona fide believed that the matter would be resolved through rectification efforts being pursued by his personal Chartered Accountant and, on account of this belief, the newly appointed tax advisor by the employer was not made aware of the appellate proceedings. 2

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV 3.6 It was only when the Appellant was in receipt of an intimation regarding the demand, that the Appellant raised the issue to his personal Chartered Accountant. 3.7 Regrettably, due to internal assumptions regarding responsibility, inadvertent lapses during the consultant transition, and the Appellant’s bona fide reliance on professional advisors, the appeal could not be filed within the prescribed time. The Appellant respectfully submits that the delay occurred entirely without his knowledge or intent and was caused by circumstances beyond his control. The Appellant has not derived any benefit from such delay and has at all times acted in good faith.” …….………… 1.1 Considering the reasons given in the said petition, the delay is hereby condoned and the appeal is admitted for adjudication.

2.1 In this case, the assessee claimed benefit of taxes retained in a foreign country (Netherlands) for which Form 67 had been filed. The benefit was denied to the assessee and even in spite of a rectification application filed before the Ld. AO-CPC, the assessee could not succeed.

2.2 The assessee took this matter to the Ld. Addl./JCIT(Appeals) where he could not succeed on the ground that Form 67 was belatedly filed on 28.03.2022. It is recorded in the impugned order that the said Form was not filed as per the due date for furnishing the returned of income u/s 139(1) of the Act.

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV 2.3 The aggrieved assessee has approached the ITAT with grounds challenging this action of Ld. Addl./JCIT(Appeals) on the ground that the filing of Form 67 within a specified date is merely a procedural requirement and thus, should not fatally effect the assessee’s claim for benefit of taxes retained abroad.

3.1 The Ld. DR relied on the contents of Circular No.9/2017 dated 09.10.2017 which specified that FTC is subject to compliance of Rule 128. It was the submission that since the Form 67 was filed beyond the due date, hence, the assessee could not get any benefit of FTC u/s 90 of the Act.

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV DTAA. The relevant portions from the decision in the case of Timirbaran Mazumder (supra) deserve to be extracted:

“5. We have gone through the submissions made and also considered the facts of the case. Similar issue arose in the case of Jaspal Singh Bindra vs. DCIT in ITA No. 1826/KOL/2024 order dated 19.11.2024 in which the Coordinate Bench (in which one of us was a member) has held as under: “7. Similar issue arose in the case of Sukhdev Sen Vs. ACIT, Circle -1, Kolkata (ITA No. 78/Kol/2014, dated 26.03.2024). The relevant extract of the aforesaid order is as under: “7. Before proceeding further, we would like to reproduce rule 128 of the Income-tax Rules, 1962 (the Rules) which relates with foreign tax credit as under: "Foreign Tax Credit. 128 (1) An assessee, being a resident shall be allowed credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such lax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India" 8. We further note that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. Article 25 of DTAA between India and USA provides for credit for foreign taxes. Article 25(2)(a) is relevant in the present context. Same is extracted below: "Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the United States, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States" 9. Thus, Section 90 of the Act read with Article 25(2)(a) of the DTAA provides that tax paid in USA shall be allowed as a credit against the tax payable in India but limited to the proportion of Indian tax Neither section 90 nor the

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV DTAA provides that FTC shall be disallowed for non- compliance with any procedural requirement. Foreign Tax Credit is an assessee's vested right as per Article 25[2](a) of the DNA road wat Section 90 and same cannot be disallowed for non-compliance with procedural requirement that is prescribed in the rules. 10. Further, we would like to mention that rule 128(9) provides that Form No. 67 should be filed on or before the due date of filing the return of income as prescribed u/s 139(1) of the Act. However, the rule nowhere provides that if the said Form No. 67 is not filed within the required time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. It is therefore evident that if the intention of the legislature were to deny the foreign tax credit, either the Act or the rules would have specifically provided that the foreign tax credit would be disallowed if the assessee does not file Form No. 67 within the due date prescribed under section 139(1) of the Act. We further note that Filing of Form No. 67 is a procedural/directory requirement and is not a mandatory requirement and violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. In support of the claim, the assessee has relied upon several decisions including the following decision: i. CIT vs. G.M. Knitting Industries (P) Ltd. 71 Tuxmann.com 35(SC) ii. Brinda Ramakrishna us. IPO 193 ITD 840 (Bang) iii. 42 Hertz Software India Pvt. Ltd vs Asst. CIT. Ita No. 29. Hang/2001 iv. Duraiswamy Kumaraswamy vs. PCIT, W.P No.5834 of 2022 11. Hon'ble Supreme Court, in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, [1992 Supp (1) Supreme Court Cases 21) in respect of compliance with the procedural requirements have observed that: "The mere fact that it is statutory does not matter one way of that other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.” 12. Further, in the case of Engineering Analysis Centre of Excellence Private Limited vs the Commissioner of Income-tax & Anr. Civil Appeal Nos. 8733-8734 of 2018 & Ors. Hon'ble Supreme Court have held as under that the provisions of DTAA shall override the provisions of the Income-tax Act unless they are more beneficial to the assessee: 165. The conclusions in the aforestated paragraph have no direct relevance to the facts at hand as the effect of section 902) of the Income Tax Act wat explanation 4 thereof, is to treat the DTAA provisions as the

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV low that must be followed by Indian courts, notwithstanding what may be contained in the Income Tax Act to the contrary, unless more beneficial to the assessee. 13. We have gone through the decisions of the coordinate Benches and concur with their findings in this regard that filing of Form No. 67 is directory and not mandatory and the credit for foreign taxes paid cannot be denied merely on the delay in filing the Form No. 67. In the case of M/s 42 Hertz Software India Pvt Ltd. Vs the Assistant Commissioner of Income Tax, Circle 3 (1)(1), Bangalore, ITA No. 29/Bang/2021 ITAT. BANGALORE it is held that: 6. There is no dispute that the Assessee is entitled to claim FTU 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. Brindu Kumar Krishna us. ITO in ITA no. 454/ Bang/2021 by order dated 17/11/2021. 7. 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. 14. In Vikash Daga Vs ACIT Circle-3 (1) Gurgaon ITA No.2536/Del/2022, the ITAT DELHI BENCH 'H', NEW DELHI vide order dated 14/06/2023 have held that: 8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the assessee holds a foreign tax credit certificate for Rs. 1887114/- In our considered opinion filing of form 67 is a procedural / directory requirement and is not a mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantive right of claiming the credit of FTC. We accordingly direct the AO to allow the credit of FTC and hold that rule 128(9) of the Rules 3 does not provide for disallowance FTC in case of delay filing of form 67 is not mandatory het directory requirement and DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. 9. In the result, the appeal filed by the assessee is allowed.

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV 15. Similarly, in the case of Ashish Agrawal Vs. Income Tax Officer, Ward-12(1), Hyderabad ITA No. 337/Hyd/2023 ITAT HYDERABAD BENCHES "B", have held vide order dated 26/09/2023 that: “11. As far as the issue of FTC is concerned, learned AR placed reliance on the decision in the case of Ms. Brinda Rama Krishna (supra) in the case of Ms Brinda Rama Krishna (supra), the Bench considered the issue in the light of the provisions of DTAA, section 295(1) of the Act, the decisions of the Hon'ble Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. Vs. Deputy Commissioner (1992 Supp (1) SCC 21), Sambhaji Vs. Gangabai (2008) 17 SCC 117 and a lot many decisions of the Hon'ble Apex Court including the case in Union of India Vs. Azadi Bachao Andolan (2003) 263 ITR 706 (SC) etc. and reached a conclusion that since Rule 128(9) of the Rules does not provide for disallowance of FTC in the case of delay in filing Form 67 and such filing within the time allowed for filing the return of income under section 139(1) of the Act is only directory, since DTAA over rides the Act, and the Rules cannot be contrary to the Act. 12. We find from Article 25(2)(a) of the DTAA that where a resident of India derives income which, in accordance with the provision of the convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of the resident an amount equal to the income tax paid in the United States, whether directly or by deduction in view of this provision over riding the provisions of the Act, according to us, Rule 128(9) of the Rules has to be read down in conformity thereof Rule 128(9) of the Rules cannot be read in isolation. Rules must be read in the context of the Act and the DTAA impacting the rights, liabilities and disabilities of the parties. 13. In the case of Purushothama Reddy Vankireddy (supra) also the Co- ordinate Bench of the Tribunal, in the similar circumstances, allowed the appeal of assessee for FTC claim. Respectfully following the same, we are of the considered Page 6 of 8 ITA No. 337/Hyd/2023 opinion that the decisions relied upon by the assessee are applicable to the facts of the case and the grounds raised by the assessee are accordingly allowed. 14. In the result, appeal of the assessee is allowed.” 16. We have also gone through the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy us. PCIT (supra) and found that the facts are identical to the facts of the case of the assessee and the decision is squarely applicable to the facts of the case of the assessee. In that case, the petitioner was resident of India and had filed Indian ITR and claimed benefit of FTC u/s 90/91 of the Act row. Article 24 of the India-Kenya DTAA. During the year, he had income of both Kenya and India but while filing the Indian ITR for the impugned assessment year 2019-20, the Form No. 67 prescribed in rule 128 of the rules for claiming FTC was inadvertently not uploaded along with the ITK which was uploaded on 02.02.2021 The return was processed on 26.03.2021, however, the credit of FTC was not given effect to and the request made to the CPC to give effect to the FTC was not accepted and 8

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV intimation along with notices of demand was received. The assessee also could not succeed with the rectification application filed and approached the CIT u/s 264 of the Act and at the same time filed a writ petition before the Hon'ble Madras High Court. It was stated by the respondent- department that rule 128 is mandatory and cannot be considered as directory in nature. The petitioner referred to the judgment of the Hon'ble Supreme Court in the case of CIT vs. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015 The Hon'ble High Court allowed the Writ Petition in favour of the assessee by holding as under:- “11. The law laid down by the Hon'ble Apex Court in Commissioner of Income Tax, Maharashtra v. G.M.Knitting Industries (P) Limited in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FIC, however the same was filed before passing of the final assessment order. The filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature This is what the Hon'ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order. W P. No 5834 of 2022. 12. Further, in the present case, the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the PTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside. 13. Accordingly, the impugned order dated 25.01.2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set wade only to the extent of disallowing of FTC clam made by the petitioner und hence, the first respondent is directed to consider only on the aspect of rejection of FTC clam within a period of 8 weeks from the date of receipt of copy of this order" 17. Respectfully following the order of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT (supra) and concurring with the views held by the coordinate Benches of the Tribunal (supra), we hold that merely because the assessee could not file Form No. 67 within the prescribed time limit as per the provisions of rule 128(9) of the Income- tax rules, 1962, as it stood during the year under consideration, will not preclude the assessee from claiming the benefit of the foreign tax credit in respect of taxes paid outside India. Therefore, the claim of the assessee is allowed and the Assessing Officer is directed to give benefit of foreign tax

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV credit in respect of tax paid outside India by the assessee in accordance with law and the DTAA between India and the USA. Accordingly, grounds no. 2,3,4 of the appeal are allowed.” 6. Thus, the claim of FTC is allowable to the assessee on the facts of the case as Form No. 67 was filed along with the return of income and the filing of the Form is held to be directory and not mandatory in nature and the provisions of DTAA override the provisions of the Income Tax Act, 1961. Further, the relevant extract of Article 25 of the AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION OF INCOME WITH USA (DTAA) issued vide Notification: No. GSR 992(E), dated 20-12-1990, which is also discussed in the case of Sukhdev Sen Vs. ACIT, Circle-1, Kolkata (ITA No. 78/Kol/2014, dated 26.03.2024) relied upon in the case of Jaspal Singh Bindra (supra) is once again reproduced as under: “ARTICLE 25 RELIEF FROM DOUBLE TAXATION 1. In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident or citizen of the United States as a credit against the United States tax on income— ( the income-tax paid to India by or on behalf of such citizen or resident ; and a )

( in the case of a United States company owning at least 10 per cent of the voting stock of a company which is a b resident of India and from which the United States ) company receives dividends, the income-tax paid to India by or on behalf of the distributing company with respect to the profits out of which the dividends are paid. For the purposes of this paragraph, the taxes referred to in paragraphs 1(b) and 2 of Article 2 (Taxes Covered) shall be considered as income taxes. 2. (a) Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in the United States, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States. (b) Further, where such resident is a company by which a surtax is payable in India, the deduction in respect of income-tax paid in the United States shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from surtax payable by it in India. 10

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV 3. For the purposes of allowing relief from double taxation pursuant to this article, income shall be deemed to arise as follows: ( income derived by a resident of a Contracting State which may a be taxed in the other Contracting State in accordance with this ) Convention [other than solely by reason of citizenship in accordance with paragraph 3 of article 1 (General Scope)] shall be deemed to arise in that other State ; ( income derived by a resident of a Contracting State which may b not be taxed in the other Contracting State in accordance with the ) Convention shall be deemed to arise in the first-mentioned State.

Notwithstanding the preceding sentence, the determination of the source of income for purposes of this article shall be subject to such source rules in the domestic laws of the Contracting States as apply for the purpose of limiting the foreign tax credit. The preceding sentence shall not apply with respect to income dealt with in article 12 (Royalties and Fees for Included Services). The rules of this paragraph shall not apply in determining credits against United States tax for foreign taxes other than the taxes referred to in paragraphs 1(b) and 2 of article 2 (Taxes Covered).” 7. Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(a) does not preclude the assessee from claiming credit for FTC in case of delay in filing the required Form No. 67 as the credit for FTC is a vested right of the assessee and since Form No. 67 was filed along with the return of income and was available at the time of processing the return of income u/s 143(1)(a) of the Act as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC. Hence, respectfully following the decisions cited in preceding paragraphs, the claim for FTC is directed to be allowed as the assessee had filed the required Form No. 67 as evidence of foreign taxes paid and the Ld. AO is directed to allow the FTC in accordance with DTAA between India & USA and as per law. Hence, Ground Nos. 1, 2 and 3 of the appeal are allowed.” 4.1 Considering that the facts are similar in the present case, there is no hesitation in holding that the assessee should get benefit of FTC and the Ld. AO is directed accordingly.

ITA No.318/DDN/2026 AKHILESH KUMAR YADAV 5. In the result, the appeal filed by the Assessee is allowed.

Order pronounced in the open court on 23.07.2026

Sd/- Sd/- (RAJ KUMAR CHAUHAN) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 11.08.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI