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Facts
The assessee claimed Foreign Tax Credit (FTC) of Rs.1,45,891/- on dividend income earned in USA for AY 2019-20. However, the claim was denied as Form 67 was not filed along with the return of income.
Held
The Tribunal held that filing of Form 67 is directory and not mandatory. Therefore, the assessee is entitled to claim the Foreign Tax Credit.
Key Issues
Whether the disallowance of Foreign Tax Credit due to non-filing of Form 67 is justified, or if Form 67 is directory in nature.
Sections Cited
143(1), 139(1), 154, 90, 128, 250
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND SHRI S.R. RAGHUNATHA
आदेश /O R D E R PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed at the instance of the assessee is directed against the order of Addl/JCIT-1, Chandigarh dated 17.02.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2019-20.
2. The solitary issue that is raised is whether the First Appellate Authority is justified in confirming the intimation issued u/s.143(1) of the Act, wherein the assessee was denied Foreign Tax Credit (FTC) of Rs.1,45,891/-.
Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2019-20, the return of income was filed on 01.07.2019 declaring income of Rs.11,89,670/-. The said income included dividend income of Rs.6,90,814/- earned in United States of America (USA). On the dividend income earned, the assessee had paid tax of Rs.1,45,891/- in USA. Therefore, in accordance with the provisions of Section 90 of the Act, while filing the return of income, the assessee claimed credit for the aforesaid tax paid in USA while discharging her tax in India.
An intimation was issued u/s.143(1) of the Act on 12.02.2021, wherein the Foreign Tax Credit amounting to Rs.1,45,890/- claimed in the return of income was denied (for the reason of failure to furnish Form 67). On receipt of intimation issued u/s.143(1) of the Act, the assessee filed Form 67 on 10.03.2021 and thereafter on 04.05.2021, the assessee filed rectification application u/s.154 of the
Aggrieved by the intimation issued u/s.143(1) of the Act for denying the claim of Foreign Tax Credit, the assessee filed appeal before the First Appellate Authority (FAA). The FAA confirmed the disallowance of FTC.
Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The assessee has filed a paper- book enclosing therein the case laws relied on. The Ld.AR submitted that the issue in question is squarely covered in favour of assessee by the order of the Chennai Bench of the Tribunal in the case of ITO vs. Smt. Chengam Durga in which is identical to the facts of the instant case.
Per contra, the Ld.DR supported the order of the CIT(A).
We have heard rival submissions and perused the material on record. The solitary issue for our consideration is whether the assessee is entitled to FTC amounting to Rs.1,45,891/- on the tax paid for the dividend income earned in USA. The reason for denying FTC was that assessee did not file Form 67 within the due date prescribed u/s.139(1) of the Act. Admittedly, the assessee had filed the return of income within the due date prescribed u/s.139(1) of the Act. However, by inadvertent omission did not enclose Form 67 along with the return of income for claiming FTC. On realizing the mistake committed, the assessee filed Form 67 on 10.03.2021 (intimation issued u/s.143(1) of the Act dated 12.02.2021). The Chennai Bench of the Tribunal in the case of Smt. Chengam Durga, supra on identical facts by following the judgment of the Hon’ble Jurisdictional High Court in the case of Duraiswamy Kumaraswamy vs. PCIT [2024] 460 ITR 615 (Madras) decided the issue in favour of the assessee. The relevant finding of the Chennai Bench of Tribunal reads as follows:- “2. The assessee filed return of income on 09.09.2021 and claimed relief u/s 90 for Rs.1.51 Lacs. The return was processed by CPC u/s 143(1) on 05.07.2022 wherein this credit was denied since the assessee did not file applicable Form No.67 to claim the said relief. The assessee filed Form No.67 along with rectification application u/s 154 on 18.07.2022 in respect of her claim. However, CPC again denied the same in an intimation issued u/s 154. Upon further appeal, Ld. CIT(A), relying on the decision of Bangalore Tribunal in the case of Brinda Ramakrishna vs ITO (ITA No.454/Bang/2021 dated 17.11.2021), directed Ld. AO to grant the credit as per Form No.67. Aggrieved, the revenue is in further appeal before us.
3. We find that this issue is squarely covered by the cited decision of Bangalore Tribunal. Recently, Hon’ble High Court of Madras in the case of Duraiswamy Kumaraswamy (WP No.5834 of 2022 & ors. order dated 06.10.2023) held that filing of aforesaid form in terms of Rule 128 is only directory in nature. The rule is only for the implementation of the
In light of the aforesaid order of the Tribunal which had followed the judgment of the Hon’ble Jurisdictional High Court, we hold that filing of Form 67 under Rule 128 of the Income Tax Rules, 1962 is directory in nature and not mandatory. Hence, we direct the AO to grant Foreign Tax Credit amounting to Rs.1,45,891/-. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 18th June, 2025 at Chennai.