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Facts
The assessee, a salaried employee, claimed Foreign Tax Credit (FTC) of Rs. 3,52,291 under Section 90 of the Income Tax Act read with Article 25 of the India-USA DTAA for income earned during secondment to the USA. The Assessing Officer and subsequently the Addl./JCIT(A) disallowed the FTC, stating that Form 67, essential for claiming FTC, was filed belatedly, beyond the due date specified under Section 139(1) of the Act.
Held
The Tribunal, relying on various Coordinate Bench decisions, held that the requirement to file Form 67 is merely directory and not mandatory to be filed by the due date of the return under Section 139(1). Therefore, the assessee is eligible to claim the foreign tax credit, and the Assessing Officer was directed to delete the addition.
Key Issues
Whether Foreign Tax Credit can be denied solely on the ground of belated filing of Form 67, despite the credit being claimed in the income tax return.
Sections Cited
90, 139(1), 143(1)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
The present appeal is directed at the instance of assessee against the order of ld. Additional/Joint Commissioner of Income Tax (Appeals)-2, Chennai dated 27th December 2024 passed for Assessment Year 2019-20, on the following grounds:-
(A.Y. 2019-2020) Pratim Chakraborty Ground No. 1:- On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) has erred in confirming the action of the Ld. Assessing Officer, CPC (Ld. AO) of not allowing Foreign Tax Credit ('FTC") of Rs. 3.52,291 allowable as per Section 90 of the Income Tax Act, 1961 ('Act') read with Article 25 of the India-USA Double Taxation Avoidance Agreement ('DTAA') read with CBDT circular 333 dated 02 April 1982, in the Intimation under Section 143(1) of the Act ('Act') on the premise that Form 67 in support of FTC was filed beyond the due date of filing of the Return of Income under Section 139(1) of the Act. It is prayed that the Ld. Jurisdictional Assessing Officer ('JAO) be directed to allow FTC of Rs. 3,52,291 as the order of the Ld. ADDL/JCIT(A) is contrary to the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The Principal Commissioner of Income Tax as well as several orders of the Hon'ble ITAT (including the orders of the Kolkata Bench in the case of the colleagues of the Appellant) as under: Income Tax Officer Vs. Sandip Choubey (LT.A. No. 742/KOL/2022) [Order of the Hon'ble ITAT in the case of another employee of my employer PricewaterhouseCoopers Private Limited ('PwC India) relating to FTC as per Article 25 of the India-United States of America ('USA') Double Tax Avoidance Agreement ('DTAA')]. Chirasree Dasgupta Vs. Income Tax Officer (LT. A. No. 1727/Kol/2024) [Order of the Hon'ble ITAT in the case of another employee of my employer PwC India relating to FTC as per Article 25 of the India-USA DTAA). Satreena Consultants Pvt. Ltd., Kolkata Vs. Income Tax Officer, Ward-11 (1) (ITA 543/KOU2022) Neetu Agarwal Vs. Income Tax Officer (ITA No. 1898/Kol/2024) Ground No. 2: On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) ought to have held that the non-grant of FTC of Rs. 3,52,291 is not a permissible adjustment under Section 143(1) of the Act as no such adjustment relating to debatable issues can be made in the Intimation under Section 143(1) of the Act 2
It is prayed that the Order of the Ld. ADDLZJCIT(A) is contrary to the following judicial precedents: Order of the Hon'ble ITAT in the case of City Manager Association Vs. DCIT, CPC Bengaluru, (ITA No.1345/Ahd/2019); Order of Hon'ble ITAT in the case of Paris Elysees India Private Limited Vs. Deputy Commissioner of Income Tax Decision of the Hon'ble Supreme Court in the case of AC IT Vs. Rajesh Jhaveri Stock Brokers (P.) Ltd [2007] 291 ITR 500. It is, therefore, prayed that the LD. J AO be directed to allow FTC of Rs.3.52,291. Ground No. 3: On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) ought to have held the entire 143(1) proceedings as invalid in law as the Ld. AO had not followed the provisos to Section 143(1)(a) of the Act of giving opportunity to the Appellant to defend his case. It is prayed that the Order of the Ld. ADDLZJCIT(A) is contrary to the following Orders of Hon'ble ITAT: Arham Pumps Vs. Deputy Commissioner of Income Tax (CPC) Bengaluru (ITA No.206/Ahd/2021) Ernst & Young Merchant banking Services LLP Vs. ADIT, CPC, [ITA No. 2333/Mum/2022] It is, therefore, prayed that the Ld. JAO be directed to allow FTC of Rs.3,52,291. The Appellant craves leave to add, amend, alter, substitute, withdraw all or any of the above Grounds of Appeal anytime either before or during the hearing of the Appeal.
The facts in brief are that during the year under consideration the assessee filed his original return on 27.08.2019 declaring gross total income of Rs.20,76,800/- . Subsequently, such return of income was revised on (A.Y. 2019-2020) Pratim Chakraborty 31.07.2020 declaring revised gross total income of Rs.33,81,000/-. During year under consideration the assessee was a salaried employee of Pricewaterhouse Coopers Private Limited (PwC India) and was sent on secondment to the United States of America by an employer of the assessee on an assignment for the period from 26.02.2019 to 21.12.2018. Being a RoR in India, income earned by the assessee in and outside India during the AY 2019-20 was offered to tax in India and Foreign Tax Credit (FTC) was claimed as per Article 25 of the India USA DTAA. Such return filed has been processed under section 143(1) of the Income tax Act, 1961 (Act) vide intimation dated 23.03.2021 issued by the Ld. ADIT, CPC. In the rectification order also similar to intimation u/s 143(1) of the Act global income of the assessee has been considered however, the Assessing Officer denied the global income from credit of foreign taxes. Also, the FTC as appearing in the impugned intimation under as computed u/s 143(1) of the Act column is Rs.0/- whereas in the return of income FTC claimed u/s 90 of the Act is Rs.3,52,291/-. Aggrieved with the assessment order passed by the Id. Assessing Officer in disallowing the foreign tax credit, the assessee preferred appeal before the Id. CIT(A) and the Id. Addl./JCIT(A) dismissed the appeal of the assessee on account of the fact that the assessee has not filed Form No.67 before the time limit specified u/s. 139(1) of the Act. Accordingly, the Id. Addl/JCIT(A) confirmed the
On being aggrieved, the assessee is in further appeal before the Tribunal against the order passed by the Id. Addl./JCIT(A) with the grounds as stated above.
It was the submission of the assessee that the ld. Assessing Officer disallowed the foreign tax credit on account of the fact that the assessee has not filed Form 67 before the time limit specified under section 139(1) of the Act. The ld. Addl./JCIT(Appeals) also confirmed the disallowance made by the ld. Assessing Officer by denying the foreign tax credit. Now the short issue remains that whether Form 67 is filed belatedly, even though the credit amount of all foreign tax credit has been claimed in the income tax return, whether the assessee is eligible to claim such foreign tax credit.
On this aspect, it was the submission of the ld. Departmental Representative that the assessee failed to file Form 67 and as per Rule 128 of the Income Tax Rules, the assessee is required to file Form 67, which is a statement of income from the country or specified territory outside India for the purpose of foreign tax credit. He further submitted that this Form has to be filed before the due date of filing of the return under section 139(1) of the Act. The assessee was unable to file Form 67 before filing (A.Y. 2019-2020) Pratim Chakraborty of the return of income due to technical reasons and filed belatedly. Therefore, the ld. Assessing Officer and ld. Addl./JCIT(Appeals) rightly made the disallowance. Therefore, ld. D.R. pleaded to uphold the orders passed by the lower authorities.
I notice that this issue came up for adjudication before various Tribunals and also the ld. Counsel for the assessee has cited the decision of other Tribunals. All the Tribunals have been consistently held that filing Form 67 is merely discretionary and merely directory in nature and even if it is filed belatedly, the assessee deserves the foreign tax credit. The ld. Counsel for the assessee has strongly relied on the decision of the Coordinate Bench in the case of Sonakshi Sinha -vs.- CIT in dated 28.09.2022 for the assessment year 2018-19 as well as the decision of the Tribunal in the case of Satreena Consultants Pvt. Limited -vs.- ITO in for the assessment year 2017-18, order dated 22.02.2023.
6.1. Considering the ratios laid down by the Coordinate Benches of the ITAT, Kolkata and ITAT, Mumbai, I have no hesitation to come to the conclusion that Form 67 is only directory. Therefore, I am of the view that the assessee is eligible to claim foreign tax credit of Rs.3,52,291/-. Therefore, the grounds raised by the
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 28/07/2025.