DHIRAJ HARGAPURE,MUMBAI vs. ASSISTANT DIRECTOR OF INCOME TAX, BENGALURU

All the grounds raised by the assessee relates to challenging the order of the Ld. CIT(A) in not allowing the Foreign Tax Credit of Rs. 1,72,713 u/s 90/90A of the Act.

We have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and also the orders passed by the Revenue Authorities. From the records, we noticed that the assessee, being a resident individual, had income from salaries outside India (Singapore) besides income from salary and other sources in India. Therefore, the assessee was required to file his return of income in India including the income earned outside India. The return was filed for the year under consideration on 31.03.2021 declaring total income and Form 67 for foreign income of Rs. 24,13,304 and tax credit of Rs. 1,72,713 was also filed on 31.03.2021, i.e., beyond the due date of 31.07.2020 but before filing the Income Tax Return for AY 2020-21.

The assessment was completed under Section 143(1)(a) of the Act on 15.12.2021 thereby accepting the returned income but denying the tax credit of Rs. 1,72,713/-. The assessee preferred a rectification application u/s 154 of the Act against the non-allowance of credit of foreign taxes paid in Singapore, however, the same was rejected on account of late filing of Form 67. Aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A), which was also dismissed.

Now before us, the Ld. AR submitted that the issue in question is squarely covered by the decision of the Coordinate Bench of the ITAT in ITA No. 2502/Mum/2024 dated 24.07.2024 and also various other judgments, which are as follows:

After considering the aforesaid judicial pronouncements and hearing the counsels for both the parties, we find that filing of Form 67 is a procedural/technical requirement and not a mandatory requirement. Therefore, violation of such procedural provisions does not extinguish the substantive right of claiming FTC.

Accordingly, following the decision of the Coordinate Bench of the ITAT in ITA No. 2502/Mum/2024 dated 24.07.2024 and the other judgments referred to above, and also keeping in view the doctrine of binding precedents and judicial consistency, we direct the AO to examine the claim and allow the Foreign Tax Credit in accordance with law. We hold that Rule 128(9) of the Income Tax Rules, 1962 does not provide for disallowance of FTC in the case of delay in filing Form 67, as the same is not a mandatory requirement but only a procedural requirement. Further, the DTAA overrides the provisions of the Act and the Rules.

Accordingly, we direct the AO to examine the claim of the assessee in Form 67 and allow the claim in accordance with the relevant provisions of law.

In the result appeal filed by the assessee stands allowed.

As the facts and circumstances in this appeal is identical to that of ITA No. 9381/Mum/2025, A.Y 2020-21 therefore, the decision rendered in above paragraphs would apply mutatis mutandis for this appeal also.