SHISHIR DHATWALIA,HAMIRPUR vs. CIRCLE 1(1) JALPAIGURI, JALPAIGURI

ITA 2583/KOL/2025Status: DisposedITAT Kolkata28 September 2026AY 2021-2211 pages
AI SummaryAllowed

What were the facts?

The assessee, Shishir Dhatwalia, filed an appeal against the order of the Addl/JCIT(A)-4, Chennai, for Assessment Year 2021-22. The assessee claimed Foreign Tax Credit (FTC) of ₹5,97,786/- for taxes paid on salary income earned in Nepal, under Sections 90 and 90A read with Rule 128 of the Income-tax Rules, 1962. The Central Processing Centre (CPC) denied the credit because Form 67 was filed after the return of income and after the intimation under Section 143(1) was issued. The assessee filed rectification applications, arguing that Form 67 is procedural and directory. The CIT(A) upheld the denial, relying on Rule 128(9). The assessee's subsequent appeal to the ITAT challenged this denial.

What did the Tribunal hold?

The Tribunal held that the filing of Form 67 is directory and not mandatory. The Tribunal relied on the decision of the Hon'ble Madras High Court in Duraiswamy Kumaraswamy vs. PCIT and the decisions of coordinate Benches in Rahul Anand and Jaspal Singh Bindra. The Tribunal found that merely because Form 67 was not filed within the prescribed time limit as per Rule 128(9) of the Income-tax Rules, 1962, it should not preclude the assessee from claiming the benefit of Foreign Tax Credit (FTC) for taxes paid outside India. The Tribunal noted that a Double Taxation Avoidance Agreement (DTAA) exists between India and Nepal. The Tribunal concluded that the claim for FTC is allowable, and the Assessing Officer is directed to grant the benefit of Foreign Tax Credit in accordance with law and the DTAA between India and Nepal. Grounds 2 to 8 were allowed. Grounds 1 and 9 were general and did not require separate adjudication. The CIT(A)'s order was set aside.

What were the issues?

1. Whether the order passed by the learned CIT(A) under Section 250 of the Income Tax Act, 1961, is bad in law. 2. Whether the learned CIT(A) erred in confirming the denial of Foreign Tax Credit (FTC) amounting to ₹5,97,786/- claimed by the appellant under Sections 90 and 90A read with Rule 128 of the Income-tax Rules, 1962. Assessee's Contentions: - Filing of Form 67 is procedural and directory, not mandatory, and delay should not deny a substantive right to FTC, especially when taxes are paid and documentation is furnished. - The CIT(A) erred in relying solely on Rule 128(9), ignoring overriding provisions of the Act and DTAA, and judicial precedents that procedural non-compliance cannot defeat substantive rights. - Denial of FTC violates principles of natural justice as no opportunity of being heard was granted before raising the demand. - The CIT(A) failed to exercise appellate jurisdiction properly by not directing the AO to admit Form 67 and grant FTC. - Denial of FTC results in double taxation, contrary to Section 90 and treaty obligations. - The CIT(A) violated principles of natural justice by not considering written submissions or providing an adequate opportunity of being heard. - Relied on: Duraiswamy Kumaraswamy vs. Pr. CIT (Madras HC), CIT vs. G.M. Knitting Industries (P) Limited (SC), Avik Anup Prabhu vs DCIT Circle 22(2). Revenue's Contentions: - The Ld. DR relied upon the order of the Ld. Addl/JCIT(A) and requested that the same may be upheld.

Which sections of the Income-tax Act were involved?

Section 90,Section 90A,Section 139(1),Section 143(1),Section 250,Section 91

AI-generated summary — verify with the full judgment below

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

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Addl/JCIT(A)-4, Chennai [Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 [the 'Act'] for AY 2021-22 dated 10.09.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: ITA No(s). 2583/KOL/2025 Assessment Yea

The order continues below.

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