ENDEL RETAIL AND CUSTOMER CARE PRIVATE LIMITED,AMBAWADI, AHMEDABAD vs. DEPUTY COMMISSIONER OF INCOME TAX, VEJALPUR, AHMEDABAD

The brief facts of the case are that assessee is a company engaged in the business of providing management consultancy. the return of income was filed declaring total income of Rs.1,01,32,670/-. the assessee provides services to clients outside India, constituting export of services. During the relevant financial year, the assessee achieved a turnover of Rs.2,39,93,130/- out of which customers deducted/withheld taxes amounting to Rs.14,32,855/- on services valued at Rs.79,45,000/- provided Kenya. The assessee filed Form 67 on October 22,2023, within the due date prescribed under Income Tax Rules 128(9), claiming a rebate or the withholding tax. However, while processing the return, the Deputy Director of Income Tax, CPC (Centralized Processing Centre), issued an intimation order under Section 143(1), wherein relief under section 90/90A amounting to Rs.14,32,855/- was not granted. Subsequently, the assessee filed a rectification request against the intimation order under section 143(1). The CPC, Income Tax Asst. Year : 2023-24 - 3– Department, Bengaluru, issued a rectification order under Section 154 but again failed to grant relief under section 90/90A.

Aggrieved by the assessee order, assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal of the assessee by observing as follows:

1 In this Appeal, the Appellant filed Return of Income for the A.Y. 2023-24 on 27.11.2023 declaring income of Rs. 1,01,32,670/-. Subsequently, the Return was processed CPC with a demand of Rs. 15,69,010/- and did not allow Foreign Tax Credit u/s 90 of the Act. Consequently, the Appellant filed Rectification to CPC, and the CPC processed the rectification u/s 154 of the Act and still did not allow the Foreign Tax Credit u/s 90 of the Act and sustained the order u/s 143(1) of the Act. This is the sole issue of the Appeal. Aggrieved with the same, the Appellant has filed the instant Appeal. The Extract of orders u/s 143(1) and u/s 154 of the Act which are as below:

2 The written submissions filed have been perused and considered carefully. Further, the Appellant company has stated that in the relevant year, it had earned Income of Rs. 79,45,000/- from outside India and taxes paid on this Income of Rs. 14,32,855/- has been claimed in the Return of Income. The Appellant has stated that it filed relevant Form 67 under Rule 128 of the Income Tax Rules, 1962 also on 22.10.2023 i.e. within due date of the Return of Income which is 30.11.2023. The extract of form 67 as furnished by the Appellant is as below:

However on verification from the e filing portal it is found that the Form 67 was filed only on 16.09.2024 i.e not within the prescribed time limit. Therefore, the claim of the Appellant that it has been filed on 22.10.2023 is incorrect. The relevant extract from e filing portal is as below:

A mandatory condition for availing Foreign Tax Credit is the filing of a Form 67 before the due date of filing of Return of Income u/s 139(1) of the Act. Therefore in the instant case, the same has not been filed within the due date for filing of Return of Income u/s 139(1) of the Act. Therefore the denial of the same by CPC is found to be correct and thus the Grounds field by the Appellant are dismissed.

In view of the above, the Appeal is dismissed. Asst. Year : 2023-24 - 4–

Heard the argument of both the parties and perused the material available on record.

At the outset, both the parties fairly submitted that the issue raised by the assessee in the present appeal stands covered by the order of the Tribunal in the case of Narendra Vishnubhai Mistry Vs. ITO for A.Y 2021-22 in ITA Nos.1473/Ahd/2024 dated 19.11.2024. For the sake of ready reference, the operative portion of said order is reproduced as under:

The facts of the case are that the Assessee during the year under consideration has filed his return of income on 29.12.2021 declaring total income of Rs. 50,62,800/-. The Assessee received an intimation under section 143(1) of the Act dated 22.03.2022 wherein the credit for Foreign Tax Credit (FTC) was not allowed and demand of Rs.12,50,630/- has been raised. The Assessee has thereafter filed application u/s 154 of the Act for rectification of the mistake regarding non-allowance of Foreign Tax Credit (FTC); however, the Assessing Officer rejected the application filed by the assessee vide rectification order u/s 154 of the Act on 12.09.2023 owing to the delay of filing Form No. 67. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Id. CIT(A) who also dismissed the appeal of the assessee on the ground that the assessee has not followed Rule 128 in respect of filing Form No. 67 on or before the due date of filing the return of income for the relevant assessment year.

Aggrieved, the assessee is now in appeal before the Tribunal.

It is an undisputable fact that the assessee has paid taxes in India as well as abroad and the tax paid in the foreign country are eligible to be credited towards the total tax payments. Since the factum is not in dispute, delay in filing cannot prejudice the right of the Asst. Year : 2023-24 - 5– assessee to claim Foreign Tax Credit (FTC). Keeping in view the specificities of the instant case, the Revenue is hereby directed to accord Foreign Tax Credit (FTC) to the assessee and carry out rectification.

In the absence of any change in factual matrix and legal proposition brought to our notice, the appeal of the assessee is hereby allowed.

In the result, appeal of the assessee is allowed.