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Facts
The assessee claimed foreign tax credit (FTC) of Rs. 8,03,598/- for taxes paid in the USA. The CPC disallowed this claim because Form 67 was filed belatedly, considering it a procedural requirement not strictly adhered to.
Held
The Tribunal held that the delay in filing Form 67 is a procedural lapse and not a mandatory condition for disallowing FTC, especially when the DTAA provisions override the Act. The Tribunal directed the AO to verify and consider the claim.
Key Issues
Whether the belated filing of Form 67 for claiming foreign tax credit (FTC) can lead to disallowance, considering the overriding nature of DTAA provisions over domestic law.
Sections Cited
90, 90A, 143(1)(a), 139(1), 139(9), 234A, 234B, 234C
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Income Tax Appellate Tribunal, “H(SMC
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 09/12/2024 passed by CIT(A), Gwalior for assessment year 2020-21 on following grounds of appeal :
1. The Ld. Asst. Director of Income Tax, CPC, Bengaluru has erred in law and on facts and in circumstances of the case by disallowing income tax relief claimed by the appellant u/s 90/90A of the Act A.Y. 2020-21 Mukeshkumar Amrutlal Shah amounting to Rs. 8,03,598/- as CPC cannot make adjustments u/s 143(1)(a) of the Act as the same are not falling with in the six limbs under which CPC can make suo moto adjustments u/s. 143(1)(a) of the Act 2. Both the Lower Authorities have erred in disallowing relief claimed by the appellant u/s 90/90A of the Act amounting to Rs. 8,03,598/- solely on the ground of delayed filing of Form 67 (Statement of income from a country or specified territory outside India and Foreign Tax Credit) despite of the fact that filing of the said form is just a procedural requirement.
3. Ld. JCIT(A) has erred in facts and circumstances of the case by not considering the order of Hon'ble CIT(A), NFAC for A.Y. 2021-22 as well as order passed u/s. 143(3) of the act by Ld. AO for A.Y. 2018-19. In fact both the said orders are in favour of the appellant on identical issue.
4. Both the Lower Authorities have erred in law and on facts in confirming in levying interest u/s. 234A, 234B and 234C.
5. On the facts and merits of the case, the appellant craves for admission of additional evidences in the interest of natural justice and equity.” Brief facts of the case are as under:
The Ld.AR submitted that the only issue that arises in the present appeal is regarding denial of foreign tax credit claimed by assessee u/s. 90 amounting to Rs.8,03,598/- in respect of foreign taxes paid outside India in USA. It is submitted that, the CPC neither issued notice 143(1)(a) nor notice under section 139(9) before disallowing the claim. 2.1 It is submitted that assessee filed return of income for year under consideration on 31/03/2021 along with form 67 which was treated to be belated and therefore the FTC claimed was rejected by the CPC. Against the order by CPC the assessee filed appeal before the Ld.CIT(A).
A.Y. 2020-21 Mukeshkumar Amrutlal Shah 3.1 The Ld.CIT(A) upheld the disallowance by holding that Rule 128 has to be strictly complied with and the assessee should have filed Form 67 before the timeline specified u/s. 139(1) and that any omission would prevent assessee from claiming the FTC. Aggrieved by the order of the Ld.CIT(A)/NFAC, the assessee is in appeal before this Tribunal.
The Ld.DR on the contrary has supported the orders passed by the authorities below. He submitted that fulfilment of requirement under rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to FTC.
We have perused the submissions advanced by both sides in the light of records placed before this Tribunal.
It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance of any procedural provision. As the provisions of DTAA override the provisions of the Act, the assessee has vested right to claim the FTC under the tax treaty, the same cannot be disallowed for mere delay in compliance of a procedural provision. The Ld.AR placed reliance on the decision of Hon’ble Madras High Court in case of WP No. 5834 of 2022 and WPS No. 5295 & 5297 of 2022 in case of Duraiswamy Kumarswamy vs. Ld.PCIT vide order dated 06/10/2023 in support of his claim. 5.1 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 A.Y. 2020-21 Mukeshkumar Amrutlal Shah mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67. 5.2 We also refer to the decision of Hon’ble Bangalore Tribunal in case of M/s. 42 Hertz Software India Pvt. Ltd. vs. ACIT reported in (2022) 139 taxmann.com 448. This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms.Brinda Kumar Krishna vs.ITO in by order dated 17/11/2021. It’s a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. reported in (2021) 432 ITR 471. 5.3 We are thus of the view that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee. Accordingly, the grounds raised by the assessee stands allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 28/03/2025