ANTRIX CORPORATION LTD,BANGALORE vs. DCIT CIRCLE 1(1)(1), BANGALORE, BANGALORE

The brief facts of the case are that the assessee is doing the marketing services for the products emanating from ISRO to the domestic and the international markets. The assessee had filed their return of income declaring the income under the heads business and income from other sources. Thereafter, the assessee had not received anything from the authorities but there is an outstanding demand appearing in the e-filing portal. The assessee tried to open the portal but the assessee was not able to download any proceedings including the intimation u/s. 143(1) of the Act. Thereafter the assessee approached the AO and the AO furnished the copy of the intimation dated 30/03/2021 on 27/06/2024. After going through the intimation, the assessee came to know that the CPC had denied the foreign tax credit u/s. 90A of the Act inspite of the fact that the assessee Form 67 in time. The assessee challenged the said intimation before the Ld.CIT(A) and submitted that the intimation is not in accordance with the provisions of the Act since the CPC had not issued any prior notice u/s. 143(1)(a) of the Act. The assessee also raised a ground about the disallowance made u/s. 40A of the Act. Insofar as the denial of FTC, the assessee submitted that they had furnished the Form 67 along with the revised return on 22/11/2019, well before the processing of the return and passing the intimation u/s. 143(1) of the Act on 30/03/2021. The assessee also relied on the several orders of the Tribunal and prayed to accept the Form 67 filed before the AO and grant the FTC u/s. 90A of the Act. The Ld.CIT(A) had remitted the other disallowances made u/s. 40A to the AO for verification. Similarly, in respect of the FTC disallowed, the Ld.CIT(A) was of the view that the assessee ought to have approached the jurisdictional CIT for condoning the delay in filing the Form 67 and in the event, the Ld.CIT had condoned the said delay, the AO is directed to consider the said Form 67 on merits.

As against the said orders, the assessee is in appeal before this Tribunal.

At the time of hearing, the Ld.AR submitted that the order of the Ld.CIT(A) insofar as the FTC is concerned, is not in accordance with the provisions as well as the orders of the Coordinate Bench of this Tribunal and prayed that the assessee need not file an application before the Ld.Jurisdictional CIT to condone the delay in filing Form 67. The Ld.AR further submitted that the Ld.CIT(A) had not considered the settled position of law that the Form 67 can be accepted by the authorities even if the same was filed belatedly. The Ld.AR submitted that in the present case, the Form 67 was filed along with the revised return well before the CPC took up the return for processing and therefore the non-consideration by the CPC is not correct and liable to be set aside.

The Ld.DR relied on the orders of the lower authorities.

In the present case, the assessee had filed the Form 67 along with the revised return on 22/11/2019, the Ld.CPC had processed the said return after the assessee had filed the Form 67 and therefore the Ld.CPC would have considered the said Form 67 filed by the assessee and grant the necessary directions. The filing of Form 67 is not a mandatory one but it is only a directory and the foreign tax credit available to the assessee could not be denied because of the delay in filing the Form 67. It is an admitted fact that the assessee had paid the tax in the foreign country and also produced the evidence in Form 67 for the said payment and therefore the same should not be subjected to tax twice, one in the foreign country and the other in India. Further, the said details were also available before the Ld.CPC while processing the return. The various orders of the Coordinate Bench of this Tribunal had held that when the Form 67 was filed belatedly before the assessment proceedings was completed, it is the duty of the AOs to consider the Form 67 and grant the relief if the same is otherwise in order. Even the filing of Form 67 was belated i.e. after the assessment proceedings was over, then also, the authorities have power to entertain the same by accepting the rectification application filed u/s. 154 of the Act or even the appellate authorities can grant the benefit at the appellate stage.

However Hon’ble High courts have held that the time limit prescribed u/r 128 is merely directory and not mandatory. In a Writ Petition No.5834/2022 in the case of Duraiswamy Kumaraswamy v. PCIT, Chennai dated 06.10.2023 for AY 2019-20 where the foreign tax credit was denied to the assessee, the Hon’ble Madras High Court held that filing of Form 67 in terms of Rule 128 of the I.T. Rules is only directory in nature. Therefore, if such Form is available at the time of processing of the return, the assessee should be granted the credit for the same. Similarly, the Hon’ble Madras High Court in 168 taxmann.com 622 held that time limit specified in Rule 128 is directory in nature. Thus, the Hon’ble Madras High Court on five separate occasions has held that the delay in filing Form 67 does not hamper the case of the assessee in obtaining the foreign tax credit.

In Ms. Brinda Rama Krishna v. ITO [2022] 135 taxmann.com 358/193 ITD 840 (Bangalore - Trib.) (para 6), Bhaskar Dutta v. Dy. CIT (International taxation) [2023] 147 taxmann.com 481/199 ITD 432 (Delhi - Trib.) (para 7), Sonakshi Sinha v. CIT (Appeals) [2022] 142 taxmann.com 414/197 ITD 263 (Mumbai - Trib.) (para 8), Vinodkumar Lakshmipathi v. CIT (Appeals) NFAC, Delhi [2022] 145 taxmann.com 235 (Bangalore - Trib.) (para 9) and Shridhar Madhav Diwan v. Dy. CIT [IT Appeal No. 102 (Hyd.) of 2023, dated 24-5-2023] similar view is taken that time limit for filing form no 67 for claiming foreign tax credit is directory and not mandatory.

The Ld.CIT(A) without considering the earlier orders of this Tribunal as well as other Tribunals, had observed that the appellate authority has no power to condone the delay in filing the Form 67 but only the jurisdictional CIT is having powers to condone the said delay and therefore directed the assessee to approach the Jurisdictional CIT for condoning the said delay in filing the Form 67 and directed the AO to take a call based on the outcome of the condonation application to be filed before the Ld.Jurisdictional CIT. We do not find that this finding is also not correct as held by the various orders of this Tribunal. The several Coordinate Benches of this Tribunal had held that the filing of Form 67 is not a mandatory one but it is only a directory one and therefore the same can be accepted by the authorities under the powers vested with them. There is no need to approach the Jurisdictional CIT u/s. 119(2)(b) of the Act. Since the Form 67 was not considered by the Ld.CPC as well as by the Ld.CIT(A), we deem it fit to remit this issue to the file of the Jurisdictional assessing officer with a direction to consider the Form 67 filed by the assessee along with the revised return on 22/11/2019 and if found, the same is in accordance with the provisions of the Act, grant the deduction of FTC u/s. 90/90A of the Act. We also direct

In the result, the appeal filed by the assessee is partly allowed.