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Facts
The assessee, a resident of India, worked in the UK for a period from 08.10.2018 to 09.10.2020. For the assessment year 2019-20, the assessee claimed Foreign Tax Credit (FTC) for taxes paid in the UK. The assessee filed Form 67 in support of the FTC claim after the due date for filing the income tax return.
Held
The Tribunal held that the filing of Form 67 is directory and not mandatory. Therefore, the denial of FTC solely on the ground of delayed filing of Form 67 was incorrect. The Tribunal directed the revenue to grant the FTC.
Key Issues
Whether the denial of Foreign Tax Credit (FTC) is justified when Form 67 was filed after the due date, considering it as a directory provision.
Sections Cited
250, 143(1), 90, 139(1)
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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND
आदेश /O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal at the instance of the assessee is directed against the Addl/JCIT(A)-2, Pune order dated 26.10.2024, 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 is whether the CIT(A) is justified in confirming the denial of Foreign Tax Credit (‘FTC’) in the intimation issued u/s.143(1) of the Act amounting to Rs.5,63,620/-.
Brief facts of the case are as follows: The assessee is an individual. He is a salaried employee with Shell India Markets Pvt. Ltd. He was on an international assignment to the United Kingdom (UK) from 08.10.2018 to 09.10.2020. For the assessment year 2019-20, the assessee was ‘Resident and Ordinarily Resident (ROR)’ under the Act. Accordingly, salary for the services rendered outside India i.e., UK for period 08.10.2018 to 31.03.2019 was offered to tax in India. Since the assessee worked in UK, he was required to offer salary income earned during the said period to tax in UK. Therefore, for the period the assessee worked in UK he had paid tax both in India and in UK. In order to avoid double taxation of salary income for the period 08.10.2018 to 31.03.2019, the assessee had claimed FTC of Rs.5,63,620/- for the taxes paid in UK as per Section 90 of the Act read with Article 24(2) of the India-UK Double Taxation Avoidance Agreement (DTAA) read with CBDT Circular No.333 dated 02.04.1982. The claim of FTC was made in the revised return filed on 21.08.2020. In support of the claim of FTC, the Form No. 67 on 04.08.2020. However, intimation was issued u/s.143(1) of the Act on 12.03.2021, wherein the claim of FTC made by the assessee was denied for the reason that Form 67 was filed beyond the due date of filing of return of income u/s.139(1) of the Act.
3. Aggrieved by the intimation issued u/s.143(1) of the Act, the assessee filed appeal before the First Appellate Authority (FAA). The Addl./JCIT(A) confirmed the intimation u/s.143(1) of the Act. The FAA held that he has no authority to condone the delay in filing Form 67 and dismissed the appeal of the assessee.
Aggrieved by the FAA’s order passed u/s.250 of the Act, the assessee has filed the present appeal before the Tribunal. The ld.AR submitted that the issue in question is covered in favour of the assessee by the Hon’ble Jurisdictional High Court judgment in the case of Duraiswamy Kumaraswamy vs. PCIT in W.P No.5834 of 2022 (judgment dated 06.10.2023).
Per contra, the ld.DR supported the order of the First Appellate Authority.
6. We have heard rival submissions and perused the material on record. The assessee had filed the return of income on 31.08.2019. In the original return, the assessee had not claimed FTC. Thereafter, the assessee filed Form 67 in support of the claim of FTC on 04.08.2020 and filed a revised return wherein FTC was claimed. The revised return was filed on 21.08.2020. Thereafter, intimation was issued u/s.143(1) of the Act on 12.03.2021 wherein the claim of FTC made by the assessee was denied for the reason that Form 67 was filed beyond the due date of filing of return of income u/s.139(1) of the Act.
The Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy, supra had held that filing of Form 67 is directory in nature and it is not a mandatory requirement. It was further held by the Hon’ble High Court that as long as Form 67 is available at the time of processing of return u/s.143(1) of the Act, the CPC needs to allow the FTC. Following the above judgment of Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy, supra, the Chennai Benches of the Tribunal had allowed the FTC in the following cases:- 1. Shri Senthil Nathan Ramakrishna Babu vs. ITO in
Shri Satishkumar Ekambaram vs. ITO in & 2070/CHNY/2024 3. Shri Jerry Nirmal Francis vs. ADIT in ITA No.846/CHNY/2022 In the case of Shri Jerry Nirmal Francis, (another employee of Shell India Markets Pvt. Ltd.,) (supra) the Chennai Bench of ITAT allowed the FTC by observing as under:- “We are of the considered view that, the AO is completely erred in denying credit for foreign tax for non-filing of Form 67 within the due date specified u/s.139(1) of the Act. The CIT(A), without appreciating facts simply sustained additions made by the AO and thus, we direct the AO to allow credit for foreign tax paid in other countries as per Form 67 filed by the assessee.”
In view of the aforesaid reasoning and considering the judicial pronouncements cited supra, we hold that filing of Form No.67 within the due date of filing the return of income u/s.139(1) of the Act is not mandatory requirement but directory. Hence, we direct the Revenue to grant the FTC as per Form No.67. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 22nd January, 2025 at Chennai.