SONAKSHI SINHA,MUMBAI vs. CIT (A) NFAC, DELHI

This appeal is filed by assessee against appellate order passed by National Faceless Appeal Centre (NFAC)[ learned CIT (A)] for assessment year 2018 – 19 on 27/4/2022 denying foreign tax credit of ₹ 2,921,327/–.

Assessee has raised following grounds:-

Assessee filed her return of income on 22/9/2018 at total income of ₹ 185,390,330/–. The case was selected for scrutiny under the limited scrutiny criteria for the issue of double taxation relief u/s 90/91. The requisite notice u/s 143 (2) of the act was issued.

The learned AO found that assessee has claimed foreign tax credit amounting to ₹ 2,921,327/– however from the filing portal it was noted that assessee has uploaded form number 67 for claiming foreign tax credit on 20/1/2020. Fact that assessee has filed her return of income on 22/09/2018, within the due date as per provisions of Section 139 (1) of the act. Thus, the issue is that form number 67, required to be filed for claiming foreign tax credit on or before the date of filing of the return terms of rule 128 (9) of the Income Tax Rules 1962, was filed belatedly. This is also confirmed by notification number 9 on 19 September 2017. Therefore the AO was of the view that assessee has failed to comply with letter and spirit of

Assessee aggrieved with the assessment order preferred appeal before National faceless appeal Centre. During the appellate proceedings assessee explained the nature of income, the foreign income received in India, she offered for taxation and tax credit available of foreign taxes. Assessee submitted that at the time of filing of the return of income she claimed the foreign tax credit of ₹ 2,921,327/– paid on the income earned in United Kingdom, however form number 67 was filed on 20/1/2020 i.e. after the due date u/s 139 (1) of the act. Assessee claimed that filing of form number 67 is a procedural requirements and not a mandatory requirement for claiming of the foreign tax credit. Merely because form number 67 was not filed within the due date

The learned CIT – A held that for the purpose of claiming foreign tax credit relief, form number 67 was notified on 27 June 2016 which is required to be furnished on or before the due date specified for furnishing the return of income. After quoting rule 128 of The Income Tax Rules, it was held that furnishing of form number 67 on or before the due date of furnishing the return of income is mandatory. It also rejected the claim of the assessee that such form can be filed at any time, for the reason that it does not have any logical legal background and such an interpretation would make the rule absurd. It also held that all the beneficial provision should be interpreted strictly as held by Honourable Supreme Court in 116 taxmann.com 885. Accordingly, the appeal of the assessee was dismissed.

Assessee aggrieved with the same has preferred appeal before us. The learned authorised representative filed a

The learned departmental representative vehemently supported the orders of the lower authorities and submitted that form number 67 is required to be filed on before the due date of filing of the return of income as provided Under Rule 128 is mandatory in nature. It is further stated that merely because the time limit for filing of the form is mentioned in the rules, it cannot be said that it is not mandatory. He submitted that for claiming of the tax credit, which is a beneficial to assessee, therefore, the conditions prescribed therein should be strictly followed. He further submitted that non-filing of form number 67 on or before the due date of filing of the return of income results into consequence of denial of foreign tax credit, therefore, the time limit provided Under Rule128 cannot be said to be directory in nature. Therefore, it is mandatory. As assessee failed to fulfil the

We have also put before the learned authorised representative decision of the honourable Supreme Court in civil appeal number 1449 of 2022 in case of PCIT versus Wipro Ltd dated 11 July 2022 as to why the condition of filing form number 67 on or before the due date of filing of the return of income should not be considered as mandatory in nature.

The learned authorised representative submitted that honourable Supreme Court was seized of the matter where in the same subsection twin conditions were mentioned, the honourable High Court and lower appellate authorities considered, one of the condition as mandatory and one of the condition as directory. He submitted that here section 90 or 91 does not lay down any condition of filing any form. The requirement of filing of the form is provided under rule 128 of The Income Tax Rules. Therefore, here, the situation is quite different. He submitted that these conditions have been considered by the coordinate bench in case of Brinda Ramakrishna.

We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income

Other grounds of appeal are also revolving around the issue of claim of foreign tax credit and therefore those are allowed.

Accordingly, appeal of the assessee is allowed.