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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against the order dated 19/07/2022 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2019-20 on following grounds of appeal:
1. The order passed by the Hon'ble Commissioner of Income Tax NFAC, Delhi, passed under section 250 of the Income Tax Act, 1961 ("the Act") is so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
2. The appellant denies himself to a liability of Rs. 32,22,030/-, on the facts and circumstances of the case.
3. The authorities below failed to appreciate that the foreign tax Credit of Rs. 21,95,472/- ought not to have been denied in computing the tax liability U/s 143(1) of the Act, on the facts and circumstances of the case. 4. The authorities below failed to appreciate that the Foreign Tax Credit allowable of Rs. 21,95,472/- was in pursuance of claim under section 90, read with Article 25 and Article 4 of the India - Singapore DTAA and the provisions of DTAA override the provisions of the income Tax Act, on the facts and circumstances of the case. 5. The learned CIT(A) failed to appreciate that the filing of the form 67 was directory and not mandatory, to erroneously hold that the delay in filing would disentitle the appellant's claim of foreign tax credit, on the facts and circumstances of the case. 6. The authorities below failed to appreciate that the adjustment of foreign tax credit in processing the return of income U/s 143(1) of the act, was beyond the scope of the section, on the facts and circumstances of the case. 7. Without prejudice, the adjustment U/s 143(1) of the Act, was made in violation of the principles of natural justice, on the facts and circumstances of the case. 8. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case. 9. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.” 2. Brief facts of the case are as under: 2.1 The Ld.AO noted that Assessee claimed Foreign Tax Credit (FTC) of Rs.21,95,472/- u/s.90/91 in respect of tax withheld by the Singapore as per India-Singapore DTAA. The assessee filed the return of income on 27/08/2020 u/s. 139(4) along Form 67.
Page 3 of 2.2 The CPC disallowed the claim on the ground that the Assessee failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) of the Rules. Aggrieved by the assessment order assessee preferred appeal before the Ld.CIT(A).
The CIT(A) confirmed the Order of the Ld.AO. The CIT(A) held that the Assessee has not filed Form 67 before the time allowed under section 139(5) of the Act, and therefore Form 67 is non-est in law. The CIT(A) also held that provisions of Rule 128(8) &(9) are mandatory in nature. The CIT(A)rejected the contention of the assessee that filing of Form 67 is a procedural requirement and noncompliance thereof does not disentitle the Assessee of the FTC. Aggrieved by the order of Ld.CIT(A), assessee preferred appeal 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.
On the contrary, the Ld.DR submitted that fulfillment 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 he submissions advanced by both sides in light of records placed before us.