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Facts
The assessee, an individual who returned to India after 42 years of service abroad, claimed foreign tax credit (FTC) for Assessment Years 2020-21 and 2021-22. The returns and Form-67 were filed under Section 139(8A) but beyond the due date under Section 139(1). The CPC denied the FTC during processing under Section 143(1), a decision upheld by the Ld. CIT(A).
Held
The Tribunal, relying on the Madras High Court decision in *Duraiswamy Kumarswamy v. PCIT*, ruled that filing Form-67 within the Section 139(1) due date is directory, not mandatory. Since Form-67 was available at the time of processing under Section 143(1), the Assessing Officer was directed to verify and allow the foreign tax credit for both assessment years.
Key Issues
Whether foreign tax credit can be denied if Form-67 and the return are filed after the due date under Section 139(1) but before the processing of the return under Section 143(1).
Sections Cited
143(1), 139(1), 139(8A)
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid two appeals filed by the assessee for Assessment Years (AYs) 2020-21 & 2021-22 arises out of the common orders of Learned Commissioner of Income Tax, Appeal, Addl/JCIT(A)-2, Surat [hereinafter “CIT(A)”] dated 25.11.2024.
The facts in both the appeals of the assessee are identical and issues are common hence, we proceed to pass a common order. For & 01/Chny/2025 :- 2 -: brevity, we shall take up the appeal in for A.Y 2020-21 as lead case.
The only ground of appeal in these appeals of assessee is against the order of Ld CIT(A) confirming the intimation order passed u/s. 143(1) of the Act by CPC, Bengaluru in not giving credit of foreign tax on the ground that Form-67 was filed beyond time limit prescribed u/s. 139(1) of the Act.
The assessee is an individual, who returned to India in May, 2013 after serving as a University staff in Physics in USA, Nigeria, Italy and Jamaica, for 42 years. The assessee has filed return of income for A.Y 2020-21 on 29.11.2022, and for A.Y 2021-22 on 23.11.2022 u/s.139(8A) of the Act along with Form-67 . The assessee has claimed foreign tax credit of Rs. 1,80,009/- for A.Y 2020-21 and Rs 1,94,582/- for A.Y 2021-22, but the same was denied in the intimation u/s 143(1)
of the Act as the assessee has not filed return and Form-67 within due date prescribed u/s. 139(1) of the Act. Aggrieved, the assessee preferred an appeal before Ld. CIT(A). On appeal, the Ld. CIT(A) has confirmed the intimation order.
& 01/Chny/2025 :- 3 -:
The Ld. Authorized Representative (A.R) of the assessee has argued that the assessee has filed return of income u/s. 139(8A) of the Act along with Form-67 and therefore, the Form 67 in support of the claim for foreign tax credit was available at the time of processing of the return. The Ld. AR argued that filling of Form-67 before the prescribed due date u/s 139(1) is directory and not mandatory and FTC is to be allowed, if the same is available at the time of processing of return. The Ld AR relied on the decision of Hon’ble Madras High Court in the case of Duraiswamy Kumarswamy v. PCIT [2023] 156 taxmann.com 445 (Mad), in this respect.
The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities.
We have heard the rival submissions, and perused the materials available on record. The assessee has filed return of income for A.Y 2020-21 on 29.11.2020 and for A.Y 2021-22 on 23.11.2022 along with Form-67 u/s 139(8A) of the Act. The returns of income were processed u/s. 143(1) of the Act on 30.12.2023 and 29.12.2023 respectively, denying the claim of foreign tax credit. The Ld. AR has argued that Form-67 was available at the time of processing return of income and & 01/Chny/2025 :- 4 -: therefore, in view of the decision of Hon’ble Madras High Court in the case of Duraiswamy Kumarswamy v. PCIT, supra, the CPC should have allowed the foreign tax credit. We note that the Hon’ble Madras High Court in the case of Duraiswamy Kumarswamy v. PCIT, supra, on identical facts has allowed the credit of FTC as under:
“12. Further, in the present case, the intimation under section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside.”
In view of the above, the A.O is directed to verify the claim of FTC and allow the same in accordance with the decision of Hon’ble Jurisdiction High Court, supra. Thus, the appeal filed by the assessee is allowed for statistical purposes only.
ITA No.01/Chny/2025 for A.Y 2021-22:
We find that the identical issue is involved in assessee’s appeal for A.Y 2021-22 also and accordingly, our adjudication above in A.Y 2020-21 applies mutatis mutandis therein as well. Therefore, for the similar reasons, we direct the A.O to verify the claim of the assessee and allow the same in accordance with decision of Hon’ble Jurisdiction High Court, supra.
& 01/Chny/2025 :- 5 -:
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on 07th March, 2025.