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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MANOJ KUMAR AGGARWAL & SHRI SONJOY SARMA
आयकर अपीलीय अिधकरण, ‘ए’ �यायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी मनोज कुमार अ�वाल, लेखा सद�यके �ी संजय शमा� ,�याियक सद�य सम� BEFORE SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER आयकर अपील सं./ ITA No: 440/Chny/2021 िनधा�रण वष� / Assessment Year: 2018-19 Swetha Shankar, ADIT, 6C, Vikas Vaikunt Bharathi Avenue, v. CPC, 3rd Street, Kotturpuram, Bangalore . Chennai – 600 085. [PAN: ALRPS-2477-F] (अपीलाथ�/Appellant) (��यथ�/Respondent) आयकर अपील सं./ ITA No: 441/Chny/2021 िनधा�रण वष� / Assessment Year: 2019-20 Loganathan Madhvan, ADIT, Plot No. V, 2nd Main Road, v. CPC, Shirdhi Sai Nagar, Bangalore . Tiruvanchery, Madambakkam, Chennai – 600 126. [PAN: AATPL-4871-D] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Mrs. M.A. Abinaya, CA & Mr. V. Balaji, CA ��यथ� क� ओर से/Respondent by : Mr. AR V Sreenivasan, Addl. CIT सुनवाई क� तार�ख/Date of Hearing : 17.08.2022 घोषणा क� तार�ख/Date of Pronouncement : 26.08.2022 आदेश /O R D E R PER SONJOY SARMA:
These appeals by different assessees are arising out of the different orders of the Commissioner of Income Tax (Appeals),
:-2-: ITA. No:440 & 441/Chny/2021 NFAC, Delhi, orders dated 13.09.2021 & 14.09.2021, respectively. The assessment orders were framed by the ITO, CPC, Bengaluru for the Assessment Years 2018-19 & 2019-20 u/s. 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”), vide orders dated 08.06.2020 & 19.03.2021, respectively. Since facts and issues are common, for the sake of convenience these appeals were heard together and are being disposed off by this consolidated order.
The assessee has raised the following Grounds of appeal that are as under:
The order of the learned CIT (A) is bad and erroneous in Jaw and against the principles of natural justice.
2. The learned CIT (A) erred in not considering the grounds of appeal
and written submissions in proper perspective.
3. The learned CIT (A) erred in exceeding his jurisdiction by confirming the penalty for "concealment of income", while the Assessing Officer levied the penalty for "furnishing inaccurate particulars of income.
4. The learned CIT (A) erred in not considering the vital fact that it is the "satisfaction" of the Assessing Officer who initiated the penalty proceedings in the course of proceedings before him" and certainly not that of the CIT (A), without there being any enhancement, to simply substitute the satisfaction arrived at by the Assessing Officer.[relying on 84 1TR 183[All]; 94 TTR 154 [All] ;77 ITD 340 [Chd] and ITA No: 5046/Del/2012 dt.10/05/2013.
5. While the learned CIT (A), in confirming the addition of Rs.4,93,360/- in the quantum appeal-copy of the appellate order is enclosed-gave a finding that the assessee has not made any efforts to locate he whereabouts of the trade creditors and that there arises a doubt whether the transaction is genuine or not, without rejecting the quantity and cost of purchases, he erred in confirming the penalty. And for other reasons that may be adduced at the time of hearing, the appellant prays that this appeal be admitted, considered and justice be rendered.
:-3-: ITA. No:440 & 441/Chny/2021 3. The brief facts of the case are that the appellant assessee i.e., Swetha Shankar, in AY 2018-19 filed his return of income for assessment year under consideration on 21.01.2019 declaring total income of Rs. 1,03,29,084/- and claimed relief of Rs. 3,37,062/- u/s. 90/90A of the Act on salary and perquisite income of Rs. 9,74,791/- earned in UK and Netherland and dividend income of Rs. 2,06,058/- in the Netherlands. The AO while processing return of income disallowed the relief claimed by the assessee u/s. 90/90A of the Act resulting into reduction of refund at Rs. 43,35,170/- claimed in return of income for the assessment year under consideration i.e., 2018-19.
Similarly, the another assesse i.e, Loganathan Madhavan in filed its return for AY 2019-20 by showing income from salary and filed its original return on 31.08.2019 which was subsequently revised on 27.03.2020 declaring total income of Rs. 88,46,640/- in which the assessee claimed relief on account of foreign tax credit (FTC) at Rs. 13,32,937/- u/s. 90 of the Act. While processing the return of income appellant’s claim of FTC was denied.
Dissatisfied with the above orders, both the assessee(s) filed two separate appeals before the Ld. CIT(A). The appeal of the :-4-: ITA. No:440 & 441/Chny/2021 assessee in Ld. CIT(A) observing as follows:
“From examination of facts of the case, provisions of section 90(2) of the Act and Article 10 read with article 234) of DTAA with Netherlands, it is evident that the appellant is entitled for taxes paid/deducted in Netherlands 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 8 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 appellant's 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, as return of income was filed on 29.01.2019 and it is stated that the requisite form 67 was filed on 08.01.2019. Since the appellant has not complied with the Rule 128 of the Income Tax Rule by filing the necessary evidence of foreign tax return, foreign tax deducted/paid, Form 67, etc within the due date for filing of return u/s 139(1) of the Act, he/she is not entitled for foreign tax credit. Thus, this ground of appeal of the appellant is dismissed.”
5. Similarly, appeal of the another assessee in for AY 2019-20 was also dismissed by the ld. CIT(A) observing as follows:
“ 5.3 It is evident from the provisions of sec. 143(1)(b) & (c) that while processing the CPC is empowered to compute the tax based on total income and grant credit for prepaid taxes including any relief allowable u/s. 90 of the Act. It is at this stage, that the appellant has a dispute with the Dept. As discussed above, the FTC is not allowable to be appellant due to the violation of rule 128(9), which is a sine-qua-non for claim of credit of FTC. The argument of the appellant on this score is therefore rejected in view of the above discussion, the action of the CPC in denying the FTC to the appellant is upheld and ground 1 is dismissed.”
:-5-: ITA. No:440 & 441/Chny/2021 Aggrieved by the orders of the CIT(A), both the assessee(s) filed two separate appeals before this Tribunal raising in the identical issues before us.
At the time of hearing, the Ld. AR of the assessee submitted that the instant issue is covered in assessee’s favour by the decision of co-ordinate bench in the case of Shri. Govindarajan Roopkumar vs ADIT in on the other hand the Ld. Sr. DR submitted that tax credit could not be allowed since the same was not paid by assessee. He also submitted that the assessee did not file mandatory Form 67 as required under the provision of law. Having heard rival submissions, the appeals are disposed off as under:
While going through the issue in the instant appeals, the Ld. CIT(A) has deciding the return of income for AY 2018-19 filed by the assessee, the ld. CIT(A) has taken a view that income tax return was required to be filed on or before 31.07.2018 which is extended to 31.08.2018 and for AY 2018-19 assessee had filed its return on 29.01.2019 and requisite Form No. 67 also filed on 08.01.2019. As the assessee did not file Form no. 67 within the due date for filing
:-6-: ITA. No:440 & 441/Chny/2021 return u/s. 139(1), the CIT(A) disallowed the claim for tax credit to the assessee.
Further in for the AY 2019-20, the CIT(A) while deciding the issue was found that the appellant filed its return of income on 20.08.2019 without upholding Form no. 67. Subsequently, the assessee revised its return on 27.03.2020 and Form no. 67 was also filed on 24.03.2020. Therefore, ld. CIT(A) taken view that belated filing Form no. 67 was violation of Rule 128(9) of the Act and disallowed the claim for tax credit to the assessee and while going through the issues, we find that CPC has processed the return of income filed by the assessee, the dispute was in respect of FTC, however, alleged that FTC had not been paid by the assessee but by his employer and therefore, no credit of the same would be granted to the assessee. We after going through the facts of the cases find that FTC has been offered by the assessee(s) as perquisites in the gross total income and tax has been paid thereon. Once this income has been offered to tax, the corresponding credit of the same would be available to the assessee(s). Therefore, once the payments has been included by the assessee(s) in the income and tax have been paid thereon then this credit would certainly be available to the assessee(s). So far as :-7-: ITA. No:440 & 441/Chny/2021 filing of Form 67 is concerned the same has been held to be mere directory requirement by the SMC Bangalore Tribunal in the cited decision as under:
“16. I have given a careful consideration to the rival submissions. 1 agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard. This decision has been followed by co-ordinate bench of Bangalore Tribunal in M/s 42 Hertz Software India Pvt. Ltd. V/s ACIT (ITA No.29/Bang/2021 order dated 07.03.2022) and also before the Madras bench in the case of Shri. Govindarajan Roopkumar (Supra). We also concur with the same
It is the findings of Ld. CIT(A) that the assessee(s) has already filed Form No.67 although belatedly. Therefore, we direct Ld. CIT(A) to verify the forms and allow tax credit to the assessee(s), if found in order.
:-8-: ITA. No:440 & 441/Chny/2021
In the result, both the appeals filed by assessee(s) are partly allowed in terms of our above order.
Order pronounced in the court on 26th August, 2022 at Chennai.