TIMIRBARAN MAZUMDER,KOLKATA vs. D.C.I.T./A.C.I.T., CIRCLE 2(1), INTERNATIONAL TAXATION, KOLKATA

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ITA 1905/KOL/2024Status: DisposedITAT Kolkata20 March 2025AY 2018-1915 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the claim for Foreign Tax Credit (FTC) is allowable to the assessee. The reasoning was based on the fact that Form No. 67 was filed along with the return of income, and the filing of this form is considered directory, not mandatory. The Tribunal emphasized that the provisions of the Double Taxation Avoidance Agreement (DTAA) override the provisions of the Income Tax Act, 1961, as they are more beneficial to the assessee. The Tribunal noted that Rule 128(a) of the Income Tax Rules, 1962, does not preclude the assessee from claiming FTC in case of delayed filing of Form No. 67, as the credit for FTC is a vested right. Since Form No. 67 was filed along with the return and was available at the time of processing under Section 143(1)(a), there was no justification for not allowing the credit. The Tribunal respectfully followed its own previous decisions and those of coordinate benches, directing the Assessing Officer to allow the FTC in accordance with the DTAA between India and the USA and the law. Grounds 1, 2, and 3 of the appeal were allowed. Grounds 4, 5, and 6 were considered submissions, and Ground 7 was general, requiring no separate adjudication.

What were the facts?

The assessee, Timirbaran Mazumder, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Kolkata 'B' Bench, against the order of the Commissioner of Income Tax (Appeals)-22, Kolkata. The appeal pertains to Assessment Year 2018-19 and challenges an order passed under Section 250 of the Income Tax Act, 1961, which upheld an intimation order under Section 143(1) of the Act. The dispute centers on the disallowance of Foreign Tax Credit (FTC) amounting to Rs. 14,35,797/- paid in the USA. The assessee had filed the return of income on 29.03.2019, which was processed on 11.06.2020, resulting in a demand of Rs. 20,48,260/-. The assessee's rectification application was rejected, leading to the appeal.

What were the issues?

1. Whether the Foreign Tax Credit (FTC) claimed under Section 90/90A to the extent of Rs. 14,35,797/- is allowable, considering the provisions of the Double Taxation Avoidance Agreement (DTAA) and the requirement of filing Form No. 67. Assessee's Contention: The assessee argued that the requirement of filing Form No. 67 along with the return is directory, not mandatory, citing decisions from various legal fora, including the Apex Court. They contended that the DTAA overrides domestic laws and that the quantum of relief claimed was not disturbed by the AO. The assessee also relied on Rule 128(9) of the Income Tax Rules, 1962, stating it does not provide for disallowance of FTC due to delay in filing Form No. 67. Precedents cited include M/s. 42 Hertz Software India Pvt. Ltd. and the Supreme Court's decision in Engineering Analysis Centre of Excellence (P.) Ltd. and Commissioner of Income-Tax, Maharashtra v. G.M. Knitting Industries (P) Limited. Revenue's Contention: The Department relied on the order of the Ld. CIT(A) and requested that it be upheld.

Which sections of the Income-tax Act were involved?

Section 90,Section 90A,Section 139(1),Section 139(4),Section 143(1),Section 143(1)(a),Section 250

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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

order : March 20th, 2025 ORDER PER BENCH: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)- 22, Kolkata [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 16.07.2024, which has been passed against the intimation order u/s 143(1) of the Act, dated 11.06.2020.

6.

Thus, the claim of FTC is allowable to the assessee on the facts of the case as Form No. 67 was filed along with the return of income and the filing of the Form is held to be directory and not mandatory in nature and the provisions of DTAA override the provisions of the Income Tax Act, 1961. Further, the relevant extract of Article 25 of the AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION OF INCOME WITH USA (DTAA) issued vide Notification: No. GSR 992(E), dated 20-12- 1990, which is also discussed in the case of Sukhdev Sen Vs. ACIT, Circle-1, Kolkata (ITA No. 78/Kol/2014, dated 26.03.2024) relied upon in the case of Jaspal Singh Bindra (supra) is once again reproduced as under:

7.

Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(a) does not preclude the assessee from claiming credit for FTC in case of delay in filing the required Form No. 67 as the credit for FTC is a vested right of the assessee and since Form No. 67 was filed along with the return of income and was available at the time of processing the return of income u/s 143(1)(a) of the Act as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC. Hence, respectfully following the decisions cited in preceding paragraphs, the claim for FTC is directed to be allowed as the assessee had filed the required Form No. 67 as evidence of foreign taxes paid and the Ld. AO is directed to allow the FTC in accordance with DTAA between India & USA and as per law. Hence, Ground Nos. 1, 2 and 3 of the appeal are allowed.

8.

Ground Nos. 4,5 and 6 are in the nature of submissions in respect of the relief claimed and Ground No. 7 is general in nature and all these Grounds do not require separate adjudication.

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