SHIWANGI SHAH,LONDON vs. DCIT ACIT, BENGALURU

PDF · subscribers
ITA 2031/KOL/2024Status: DisposedITAT Kolkata20 July 2026AY 2021-2212 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee should be allowed the benefit of foreign tax credit, even if Form No. 67 was not filed within the prescribed time. The Tribunal also directed the AO to consider the assessee's claim of non-resident status and grant appropriate relief.

What were the facts?

The assessee filed an income tax return declaring total income and claiming foreign tax credit. The return was processed as a resident without allowing the credit. The assessee's appeal to the CIT(A) was dismissed due to procedural issues regarding the change of residential status and the claim of foreign tax credit.

What were the issues?

Whether the assessee is eligible for foreign tax credit despite procedural lapses, and whether the AO can consider the assessee's non-resident status at the appellate stage.

Which sections of the Income-tax Act were involved?

Section 90,Section 139(8A),Section 143(1),Section 119(2)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH AT KOLKATA Before SHRI YOGESH KUMAR US, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No(s). 2031/KOL/2024 Assessment Year(s) 2021-22 Shiwangi Shah DCIT ACIT, Bengaluru Vs. (Appellant) (Respondent) PAN: FEKPS5413E Appearances: Assessee represented by : None. Department represented by : Santanu Ghosh, Sr. DR. Date of concluding the hearing : 16.06.2026 Date of pronouncing the order : 20.07.2026 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Addl/JCIT(A)- 11, Mumbai [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2021-22 dated 27.06.2024. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: "1.0 On the facts and circumstances of the case, the learned Addl./Joint Commissioner of Income Tax-11, Mumbai has erred in dismissing the appeal by not considering the material evidences furnished regarding my residential status as "Non-Resident" and not directing the learned AO to delete the income earned outside India from the total income of the appellant. 2.0 On the facts and law, the learned Addl./Joint Commissioner of Income Tax, Mumbai-11 has erred in not adjudicating the alternate ground of appeal regarding the relief claimed at Rs. 48,50,320/- u/s. 90 of the Income Tax Act 1961 in the Income Tax Return filed and disallowance by the Asst.

“5.4 As per the provisions of the Income Tax Act 1961, making any change in return of income can only be allowed after filing a valid revised return of income u/s.139(5) or 139(8A). However, one can file a revised return u/s.139(5) of the Act by 31st December of the relevant assessment year or before the completion of assessment, whichever is earlier, and u/s. 139(8A) revise return can be filed within 24 months from the end of relevant AY provided that the provision of this sub-section shall not apply. From the facts of the case, it is evident that the original return of income was filed on 11/03/2022 which was subsequently processed u/s.143(1) on 02/08/2022 the return was processed in the status of individual and resident. The appellant filed application for rectification u/s.154 of the Act claiming that her status was non-resident therefore the income may be revised considering her claim and allow refund of tax deducted abroad. This application was rightly rejected by CPC stating that there was no apparent mistake from record which could be rectified. I agreed with the finding the CPC that the change of status from resident to non-resident is not a subject matter of rectification but can only be corrected by filing a revised return. The appellant thereafter revised its return u/s.139(8A) and reduced its income originally returned. This claim was also rejected by CPC with the following comment. “Return has been filed u/s 139(8A) with a tax liability which is less than the tax liability declared in the previous return filed u/s 139(1)/(4)/(5)”. Now the appellant is in appeal before the undersigned for allowance of claim of refund. The claim of the appellant is examined in light of the various provisions of the Act. Firstly, any change of status could only be effected by filing her revised return. Since the assessment proceedings u/s.143(1) were completed prior to filing of revised return this option could not be exercised. Moreover, the section of 139(8A) clearly shows that revised return under this section cannot be field declaring lower tax liability in the return filed u/s.139(1). The recourse available to the appellant is to file condonation before the competent authority u/s.119(2)(b) to exercise her claim. 5.5 Section 119(2)(b) of the Act empowers the Central Board of Taxes (CBDT) to issue instructions to lower levels of authority vide CIRCULAR NO. 9/2015

13.

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 or the 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.”

14.

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 90(2) of the Income Tax Act, read with explanation 4 thereof, is to treat the DTAA provisions as the law 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.

15.

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 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)

16.

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 but a 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. 17. 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

18.

We have also gone through the decision of the Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT (supra) and find 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 r.w. 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 ITR 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 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:

8.1 Since the facts are identical except for the DTAA with the country being different but similar provisions exist, we therefore following the

More judgments on Section 90

All 1,075 judgments and leading authorities on Section 90 →

Recent GST High Court judgments

Search GST case law →