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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI. B.R. BASKARAN & SMT. BEENA PILLAI
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 26.07.2021 passed by Ld.CIT(A)in a faceless appeal on following grounds of appeal: “1. That on facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax Appeals ["CIT(A)], the learned Assessing Officer ("AO") and the Central Processing Centre ("CPC") have erred in not granting the Foreign Tax credit ("FTC") to the extent of Rs. 15,87,973/- as claimed in the revised return of income per the provision of the Income Tax Act, 1961 and India - US Double Taxation Avoidance Agreement ("DTAA").
2. The learned CIT(A) has erred in law and on facts in not granting FTC claimed as per the revised return, on the erroneous understanding that the Appellant had not Page 2 of Form 67 as per rule 128 of the Income Tax Rule before furnishing the return u/s 139(1) of the Act.
3. On facts and circumstances of the case, the learned CIT(A) has failed to appreciate the fact that Form 67 was duly filed online by the Appellant on 7 August 2018 before filing the original return of income, and an updated Form 67 was filed again before the filing of revised return of income as per section 139(5) of the Act to claim the enhanced FTC.
4. The learned CIT(A) and the AO have erred in not granting credit to the Appellant on foreign tax paid in spite of the fact that two Form 67 were duly filed online by the Appellant and were available at the time of passing of the Orders, thereby causing miscarriage of substantial justice to the Appellant. The appellant craves leave to add, alter, rescind and modify the grounds herein above or produce further documents, facts and evidence before or at the time of hearing of this appeal. For the above and any other grounds which may be raised at the time of hearing, it is prayed that necessary relief may be provided.”
2. Brief facts of the case are as under: 2.1 The assessee is a Green Card Holder of USA and was working with Thomson Reuters India Pvt. Ltd. The assessee filed its return of income on 07.08.2018 u/s. 139(1) of the Act for the year under consideration declaring total income at Rs. 9,08,20,122/- and claimed credit for taxes paid in the US under Article 25(2)(a) of India-US DTAA amounting to Rs. 2,95,156/-. 2.2 Subsequently, the assessee filed revised return u/s. 139(5) of the Act, declaring total income at Rs. 9,04,62,460/- and claimed credit for the taxes paid in the US under Article 25(2) of India-US DTAA amounting to Rs. 18,83,129/-. The case was selected for limited scrutiny and the assessment was completed at revised return of income at Rs.9,04,62,460/- on 18.03.2021. However, the Ld.AO did not allow the relief claimed u/s 90 of the Act in respect of credit of tax Page 3 of already paid by the assessee which was disclosed in the assessee’s revised return. Aggrieved by the order of Ld.AO, the assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) observed and held as under: “From examination of submission & evidences furnished by the appellant during appellate proceedings, provisions of section 90(2) of the Act and Article 25 of DTAA with US, it is evident that the appellant is entitled for taxes paid/deducted in US against the income declared in Indian Income Tax, if the appellant follow the procedures for getting foreign tax credit as Rule 128 of the Income Tax Rule. As per the sub-rule 9 of rule 128, the appellant is required to furnish Form No. 67, foreign tax deduction certificate, foreign tax payment proof, etc on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act. In the appellants case, the income tax return was required to be filed on or before 31 July. 2018 extend to 31st August. 2018. However, the appellant failed on this count to show that he had furnished the relevant documents as per rule 128 of the Income Tax Rule before furnishing the return u/s 139(1) of the Act. In fact, the appellant has furnished Form 67 on 30.03.2019 i.e. one day before filing of the revised return of income and not before the original return of income in which foreign tax credit of Rs. 2,95,156/- was claimed. So far as the case laws cited by the appellant is concerned, these case laws relate to doubly taxation of foreign income whereas the issue in the instant case is allowability of credit of foreign tax deducted/paid, which is governed by rule 128 of the Income tax Rule. Also, rule 128 has been introduced w.e.f. 01.04.2017, which is much later the date of decision of the cited case laws by the appellant. Hence, the decision of the cited case law is not applicable in the instant case. Since the appellant has not complied with the Rule 128 of the Income Tax Rule by filing the necessary evidence of foreign tax deducted/paid, form 67, etc with the original return of income, he is not entitled for foreign tax credit. Thus, this ground of appeal of the appellant is dismissed.” Aggrieved by the order of the Ld.CIT(A), assessee filed appeal before this Tribunal.
3. At the outset, the Ld.AR submitted that there is a delay of 31 days in filing the present appeal. He submitted that extension of Page 4 of COVID-19 second wave was withdrawn by Hon’ble Supreme Court vide order dated 23.09.2021, with effect from 03.10.2021. The Ld.AR submitted that limitation period starts from 03.10.2021 in filing the present appeal. 3.1. The Ld.DR could not controvert the above submissions. 3.2. We have perused the submissions advanced by both sides. Hon’ble Supreme Court vide order dated 23.09.2021 has excluded limitation period expiring between 15.03.2021 till 02.10.2021. Accordingly, the present appeal cannot be treated to have been filed belatedly. Therefore present appeal is treated to be filed within the limitation period.
The Ld.AR at the outset submitted that, the issue of Foreign Tax Credit (FTC) was not considered by the Ld.CIT(A) on the basis that assessee did not comply with Rule 128 of filing the necessary evidence in Form 67 along with original return of income. Before us, the assessee has submitted that all the details necessary to consider the claim is available. He also submitted that the requirement to file all the details as per Rule 128 was introduced w.e.f. 01.04.2017. He thus prayed for the issue to be remanded for considering the details filed. 4.1. The Ld.DR though vehemently opposed to the prayer, the Ld.AR could not controvert the availability of these documents and the benefit that the assessee could derive. We have perused the submissions advanced by both sides in the light of records placed before us.
We note that the disallowance of the claim of FTC was due to non-availability of evidences / details as per Rule 128. Now that Page 5 of Ld.CIT(A) to examine the same and to consider the claim of assessee in accordance with law. The Ld.CIT(A) is directed to pass detailed order on merits. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, the grounds raised by assessee stands allowed for statistical purposes. In the result, the appeal filed by assessee stands allowed for statistical purposes. Order pronounced in the open court on 31st January, 2022.