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Facts
The assessee, on assignment in Malaysia, declared double tax salary and claimed foreign tax credit. The assessee filed Form 67, but it was considered belatedly by the AO and Ld. CIT(A), leading to disallowance of the foreign tax credit.
Held
The Tribunal held that disallowing foreign tax credit solely on the technicality of delayed filing of Form 67 is not justified, especially when the assessee is entitled to claim FTC under the DTAA. The AO and CIT(A) erred in not granting the credit.
Key Issues
Whether the foreign tax credit can be denied due to the procedural delay in filing Form 67, despite being eligible under the DTAA.
Sections Cited
143(1), 154, 139, 90, 234B, 234C, 6, 139(1)
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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Appeals)- NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 26.07.2024 for AY 2021-22.
Assessment Year: 2021-22 Aditya Somani.
Brief facts of the case of the assessee are that the assessee filed its return of income for AY 2021-22, declared double tax salary of INR 4,80,293/-and claimed foreign tax credit of INR 1,13,925/- as the assessee was on assignment to Reckitt Benckiser Malayasia SDN BHD. Form no. 67 was also filed by the assessee along with necessary proof of payment of tax in Malayasia. The assessee received an intimation order u/s 143(1) of the Act wherein the demand of INR 54,170/- was raised against him.
Aggrieved by the said order various rectifications were filed online but vide rectification order u/s 154 of the Act FTC credit was disallowed and erroneous demand of IRN 38,490/- [after adjustment of refund of INR 82,073/-] has been raised by the assessee on account of non-grant of foreign tax credit of INR 1,13,925/- and by not considering the From no. 67.
Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed by holding that the appellant has failed to file Form no. 67 within due date specified for furnishing the return of income under sub-section 1 of Section 139 of the Act.
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
The Ld. Counsel of the assessee challenges the very impugned order of the AO confirmed by the Ld. CIT(A), that the Ld. ADIT / CPC has erred in not granting the foreign tax credit amounting to Rs. 1,13,925/- as the assessee declared double tax salary of INR 4,80,293/- which was taxable both in Malayasia as well as in India. The Ld. Counsel further submits that the Ld. ADIT has erred in not considering the said claim made through filing of form no. 67 along with back up documents as the assessee was on Malayasia on assignment during the year under consideration and the assessee has offered income tax and claimed the tax benefit under DTAA between Malayasia and India based on the provision of Section 90 of the Act read with Article 24 of DTAA Act. The ld. Counsel further submits that the assessee has also filed a statement in form no. 67 whereby a details of tax benefit under DTAA between Malayasia and India had been mentioned. The Ld. Counsel further submits that CPC has erroneously adjusted the Assessment Year: 2021-22 Aditya Somani. refund of INR 83,070/- claimed in the return of income and wrongly raised a demand of INR 38,490/-. He has also challenged the levying of interest u/s 234B and 234C of the Act. The Ld. A.R has also cited several judicial pronouncements which is as under: i) Rahul Anand vs. ADIT [2024] 169 taxmann.com 281 (Kolkata-Trib.) ii) Debanjan Chatterjee vs. DDIT [2024] 169 taxmann.com 685 (Kolkata-Trib.) iii) Surendra Kumar Goenka vs. ADIT [2024] 169 taxmann.com 306 (Kolkata-Trib.) iv) BGA Electrical & Services Pvt. Ltd. vs. [2024] 169 taxmann.com 272 (Kolkata- Trib) v) Anindya Sarkar vs. ADIT in vi) Kuthoore Nataranjan Venkatasubramanian vs. PCIT [2024] 168 taxmann.com 622 (Madras) vii) Manoj Kumar Srivastava vs. ACIT [2024] 163 taxmann.com 296 (Delhi-Trib).
6. Contrary to that the Ld. D.R supports the impugned order.
Upon hearing the submission of the counsel for the respective parties. The following facts have been emerged: i) The assessee was on assignment to Reckitt Benckiser Malayasia SDN BHD ii) During the said order based on his physical presence in India the assessee qualified to be a resident and ordinarily resident of Income as per provision of section 6 of the Act. iii) The assessee filed its return of income and the assessee declared double taxable income of INR 4,80,293/- and claimed foreign tax credit of INR 1,13,925/- under Article 24 of the DTAA Act. v) An intimation order u/s 143(1) of the Act was received. vi) The assessee filed rectification order and various rectifications filed by the assessee but at least there was an erroneous demand has been raised.
We have gone through the order passed by the Ld. CIT(A) and find that the Ld. CIT(A) has dismissed the appeal of the assessee by observing thus:
5.4 I find from perusal of Annexure-FSI and Annexure-TR of the rectification order u/s 154 of the Act, wherein the CPC has computed the same amount of tax credit as claimed by the appellant in the ROI. However, the said credit has not been provided in the tax computation by CPC in the same order as the appellant has failed to file form 67 within the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act. 5.5 Therefore, as per Rule 128(9) of the I. T. Rules, 1963, the appellant is required to furnish Form no. 67 well within the due date specified for furnishing the return of income under sub- section (1) of Section 139 of the Act. In the case of the appellant, it is noticed that Form 67 has been field by the appellant on 02.01.2023 after the due date of filing the return of income for AY 2021-22 and even after processing u/s 143(1) of the Act on 02.09.2022. The appellant has submitted that claiming FTC is a vested right of the appellant as per Article 24 of the India- Malayasia DTAA read with Section 90 of the Act and the provision of DTAAA cannot be undermined by bringing in procedural requirements in the matter of claiming FTC.
9. Going over the order passed by the Ld. CIT(A) it appears that the Ld. CIT(A) has dismissed the appeal of the assessee only on this ground that the assessee has failed to file form no. 67 within due date. In this context, we have gone through the cited judicial pronouncements and find that in the case of Surendra Kumar Goenka vs. ADIT (supra) in which myself is the author of this judgment has held thus:
“8. We find that the assessee has filed its original income tax return on 31.07.2017 u/s 139(1) of the act and Form no. 67 has been filed on 12.07.2018. The Ld. CIT(A) has dismissed the case of the assessee only on this ground that there was a delay in filing of form no.
We have perused the decision of Co-ordinate bench of Kolkata in the case of Anindya Sarka vs. ACIT, CPC in for AY 2020-21 dated 26.07.2024. The operative part is reproduced as under: "7. The Ld. DR supported the order of the Ld. CIT(A). We have gone through the rival contention and also examined the facts. It was submitted before the Ld. CIT(A) by the assessee that the rerun of income was filed on 25.12.2020 and on 26.12.2020 he had submitted the Form No. 67 after receiving the communication from the e-filing team, Income Tax Department on 25.12.2020 that the return of income was not accompanied by Form No. 67 as mandated by Assessment Year: 2020-21 Assessment Year: 2021-22 Aditya Somani. Surendra Kumar Goenka law. Subsequently, since the credit was not allowed, he filed rectification application and Form No. 67 on 03.07.2022 and prior to that rectification requests on 21.05.2022 and on 07.06.2022 were also filed. The credit was not allowed since From No. 67 was filed beyond the date for filing the return of income under Section 139(1) of the Act. In the case of Mahua Bagchi Vs. ACIT (supra) relied upon by the assessee, it is held as under: "5. After hearing rival contentions and perusing the material on record, we find that the assessee served abroad and some foreign tax to the tune of Rs. 17,72,470/- was deducted in United Kingdom under DTAA between India and UK and provision of Section 90(2) of the Act. We also note that Rule 128 sub-Rule 9 provides that Form- 67 should be filed on or before the due date of filing the return of income. However, we note that nowhere it is stated that in case of delayed filing of Form-67 by way of foreign tax credit which is deducted from the assessee in foreign country i.e U.K. would be denied. Accordingly, we are of the considered view that the assessee is entitled to get this foreign tax credit of Rs. 17,72,470/- u/s 90 of the Act. We also note that the claim in respect of foreign tax was allowed in the order passed u/s 143(1) of the dated 28.03.2019 and was withdrawn by the AO by passing order u/s 154 of the Act when the assessee filed form 67 before the AO. In our opinion the credit in respect of foreign tax cannot be denied to the assessee for the technicality of not filing the form 67 within the due date of return u/s 139(1) of the Act. The case of the assessee finds support from the decision of Coordinate Benches in the case of Atanu Mukherjee Vs. ITO in for AY 2020-21 order dated 20.12.2022 and Sobhan Lal Gangopadhyay Vs. ADIT in ITA No. 782/KOL/2022 for AY 2020-21 order dated 09.05.2023.
In the result, the appeal filed by the assessee is allowed."
The relevant extracts of Article 24 of the Treaty on Relief From Double Taxation is reproduced below for ready reference:
Assessment Year: 2021-22 Aditya Somani. 11. Since the facts of the case at hand each similar as that of the case decided by the Co-ordinate Bench as above, we therefore respectfully following the same set aside the order of the Ld. CIT(A) as well as AO and direct the AO to allow the credit of foreign tax to the assessee. So far other issue is concerned i.e. in consonance with eth above contention hence levying additional interest is also hereby set aside.
In the result, the appeal filed by the assessee is allowed.
Order is pronounced in the open court on 16th April, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 16th April, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Aditya Somani, 122, Sukanta Sarani, Bhadrakali, Hindmotor, Hooghly-712232 2. Respondent – ITO, Ward-34(1), Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)