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Income Tax Appellate Tribunal, B BENCH: CHENNΑΙ
Before: SHRI ABY T. VARKEY & SHRI MANOJ KUMAR AGGARWAL
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 17.02.2025 for the Assessment Year (hereinafter referred to as "AY”) 2018-19.
The only grievance of the assessee is against the action of the Ld.CIT(A) denying the Foreign Tax Credit (FTC) as claimed by the assessee.
The brief facts are that the assessee, an individual, filed his return of income (RoI) for the AY 2018-19 on 27.08.2018 vide Ack.No.181726511270818, declaring taxable income of Rs.8,03,23,780/- under the head’s income from salaries, house property and other sources.
During the year, the assessee received Rs.7,30,95,488 (USD 11,42,117) as dividend from a foreign company incorporated in the USA and the same was duly declared in the ITR under the head ‘income from other sources’. The withholding tax of Rs.1,82,73,872/- (USD 2,85.529.29) made by the foreign company was duly claimed as relief u/s.90 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) in the ITR.
However, the assessee inadvertently omitted to file Form 67, as required under Rule 128 of the Income Tax Rules, 1962, on or before the due date of filing the ITR u/s.139(1) of the Act. According to the assessee, the said Form was later filed voluntarily on 18.06.2020 on coming to know about the omission. During the scrutiny assessment, the AO asked the assessee ‘as to why’ the FTC claim should not be denied since Form 67 was not filed within the stipulated date. And the assessee brought to his notice that Form 67 has been filed though belatedly on 18.06.2020 before him.
However, the AO disallowed FTC of Rs.1,82,73,872/- only on the ground that Form 67 was not filed within the stipulated due date.
On appeal, the Ld.CIT(A) has confirmed the action of the AO. It is noted that the assessee has filed ITR for AY 2018-19 on 27.08.2018 declaring income of Rs.8,03,23,780/- and claimed FTC of Rs.1,82,73,872/- (USD 2,85.529.29) remitted/withheld by the foreign company in USA, while giving assessee dividend of Rs.7,30,95,488/- (USD 11,42,117). The assessee while filing ITR inadvertently omitted to file Form 67 as required under Rule 128(9) of the Income Tax Rules, 1962 on or before the due date of ITR u/s.139(1) of the Act. However, it is not disputed that the assessee had filed belatedly Form 67 on 18.06.2020 and brought to the notice of the AO that it has filed Form 67 on 18.06.2020 during the course of assessment proceedings. However, the AO passed the assessment order on 10.01.2021 denying the claim only on the ground that the assessee didn’t file Form 67 before the due date of filing of the ITR u/s.139(1) of the Act, which has been confirmed by the Ld CIT(A). We don’t countenance this action of the Ld.CIT(A)/AO. In the light of the settled position, we are of the view that the condition prescribed for filing Form 67 along with RoI u/s.139(1) is directory in nature, and since, the assessee has filed the same before the assessment was framed, the FTC claim ought to have been allowed as held by the Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy (WP No.5834 of 2022 & ors. order dated 06.10.2023), wherein it was held by their Lordship that filing of this Form in terms of Rule 128 was only directory in nature. And further observed that the Rule is only for the implementation of the provisions of the Act and it would always be directory in nature. Respectfully following the same, we direct Ld. CIT(A) to grant impugned Foreign Tax Credit to the assessee after verifying Form No.67.
In the result, appeal filed by the assessee is allowed and Stay Petition filed by the assessee is dismissed as infructuous.
Order pronounced on the 04th day of June, 2025, in Chennai.