EIM SOLUTIONS INDIA PRIVATE LIMITED ,BANGALORE vs. DCIT, CIRCLE-2(2)(1), BANGALORE

The only issue involved in this case is non-grant of Foreign Tax Credit (FTC) of Rs.51,14,474 made by the assessee in view of DTAA between India and Kenya.

The brief facts of the case show that assessee is a company, filed its return of income on 30.11.2019 at a total income of Rs.265,97,440. This return was processed u/s. 143(1) of the Act on 19.3.2021 against which the assessee filed a rectification application u/s. 154 of the Act which was disposed of by order dated 16.11.2022. Thus, against that order the assessee is in appeal before us.

The order u/s. 143(1) was passed denying the assessee the FTC u/s. 90 of the Act since Form 67 was not filed before the due date of filing of return of income. The assessee filed application u/s. 154 of the Act relying on judicial precedents of the coordinate Benches wherein it is held that filing of Form 67 before the due date is only directory in nature and further Form 67 is available before the processing authority. The application of the assessee was rejected citing sub-Rule (9) of Rule 128 and that assessee ‘shall’ file Form 67 to claim FTC in terms of sub- Rule (8) within the due date of filing of return of income specified u/s. 139(1) of the Act. Further the word “shall” implies that the requirement of filing Form 67 in time is mandatory and not directory in nature. Thus the application was rejected.

The assessee preferred an appeal before the ld. CIT(A) wherein host of judicial precedents were cited, but the ld. CIT(A) was not impressed. He dismissed the appeal of the assessee. The assessee is in appeal before us.

The ld. AR submitted a paperbook containing 222 pages submitting that FTC was available to the assessee because of withholding of tax and Form 67 was filed by the assessee which is placed at page 206 of the PB. The assessee filed the same on 30.3.2021 for AY 2019-20. He further referred to the rectification application filed by the assessee. He relied upon several judicial precedents wherein it is held that filing of Form 67 belatedly could not deny the benefit of FTC to the assessee. Over and above the decision of Coordinate Benches, the assessee further relied upon the Hon’ble Madras High Court decision in [2025] 174 taxmann.com 754 in the case of Venkatanarayanan Somayaji Lakshminarasimha v. PCIT wherein it has been held that delay in filing Form 67 is only a procedural lapse which could be condoned and thus FTC cannot be denied for belated filing of Form 67.

The ld. AR therefore submitted that non-granting of Foreign Tax Credit to the assessee is incorrect.

The ld. DR vehemently supported the orders of the ld. lower authorities. Referring to Rule 128 of the I.T. Rules, he submitted that there is a mandatory provision for filing Form 67 which cannot be held to be directory at all. He submitted that For the relevant year , Form 67 was required to be filed on or before the due date of filing of Return of

We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. The assessment year involved before us is AY 2019-20 for which the due date of filing of return of income was 30.11.2019. The assessee filed return of income on 30.11.2019 wherein assessee has claimed FTC u/s. 90 of Rs.51,41,474. This return was processed u/s. 143(1) of the Act on 19.3.2021 wherein the FTC allowed to the assessee was determined at Nil. The assessee filed a rectified ITR on 29.3.2021, filed Form 67 also on 30.3.2021 and requested to reprocess the ITR on 7.4.2021. Further the assessee filed a rectification application with the jurisdictional AO on 2.11.2022 wherein the order of rectification was passed by the JAO on 16.11.2022. Thus the claim of the assessee of FTC was denied of Rs.51,14,474.

According to the provisions of section 143(1)(c) the assessee should be allowed any relief allowable u/s. 90. There is no requirement at present if there a variation in the sum mentioned in sub-clause (c). However, it is unfair to make an adjustment of FTC allowable to the assessee which is claimed in the return of income to be disallowed without stating any reason or giving a show cause notice or proposal to make an

In the result, the appeal by the assessee is allowed for statistical purposes.