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Facts
The assessee filed their return of income for A.Y 2022-23, claiming foreign tax credit. The Assessing Officer denied this credit for not filing Form 67 by the due date. The CIT(A) sustained this disallowance.
Held
The Tribunal held that as per the amended Rule 128(9) applicable for A.Y 2022-23, Form 67 can be filed by the end of the assessment year. Since the assessee filed Form 67 before the due date and the amended rule was applicable, the denial of credit was incorrect.
Key Issues
Whether denial of Foreign Tax Credit is justified when Form 67 was filed as per amended rules, even if not strictly as per pre-amended rules?
Sections Cited
143(1), 139(1), 139(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “B” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
ORDER PER MANJUNATHA G. : This appeal has been filed by the Assessee against the order dated 28.02.2025 of the learned Addl./ JCIT(A)-2, Guwahati, relating to the assessment year 2022- 2023.
The brief facts of the case are that, the appellant, an individual, filed his return of income for the A.Y 2022-23 on 07.11.2022 declaring total income of Rs.29,62,280/- and claimed foreign tax credit of Rs.5,70,918/-. The return of 2 ITA.No.649/Hyd./2025 income filed by the assessee has been processed and intimation u/s 143(1) of the I.T. Act, 1961 was issued on 31.01.2023 with a demand of Rs.5,70,918/- where the Assessing Officer has denied credit for foreign taxes paid outside India for non-filing of Form 67 on or before the due date for filing of return of income u/s 139(1) of the Act.
On appeal, the learned CIT(A) sustained the additions made by the Assessing Officer towards disallowance of Foreign Tax Credit on the ground that, filing of Form 67 within the due date specified u/s 139(1) of the Act is mandatory and since the assessee has not filed Form 67, therefore, the Assessing Officer passed order u/s 143(1) of the Act on 31.01.2023 u/sec.143(1) of the Act, in absence of relevant Form 67 filed within the due date and that, the Assessing Officer has rightly denied credit for Foreign Tax Credit.
Aggrieved by the order of the learned CIT(A), the assessee is in appeal before the Tribunal.
3 ITA.No.649/Hyd./2025 5. CA, S. Venugopal, learned Counsel for the assessee referring to the various facts submitted that, the learned CIT(A) erred in sustaining the demand created by the Assessing Officer by rejecting Foreign Tax Credit claim for non-filing Form 67 on or before the due date for filing the return of income u/s 139(4) of the Act. The learned Counsel for the assessee further referring to the notification issued by the CBDT dated, 18.08.2022 submitted that, Rule 128(9) has been substituted with a new rule and as per the amended rules, the statement in Form 67 shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred to in Sub Rule (1) has been offered to tax or assessed to tax in India, provided the return of income for the said A.Y has been furnished on or before the due date specified under sub-section (1) of sub- section (4) of section 139 of the Act. In the present case, the assessee has filed the return of income along with Form No.67 on 07.11.2022 on or before the due date of filing the return of income u/sec.139 of the Act. The Assessing Officer passed order u/s 143(1) of the Act on 31.01.2023. These
4 ITA.No.649/Hyd./2025 facts have been explained to the learned CIT(A) in light of the amended rule 128(9) of the I.T. Rules, 1962 along with the evidence for filing Form 67 on 07.11.2022. But, the learned CIT (A) without considering the relevant facts, simply rejected the argument of the assessee. Therefore, he submitted that the addition made by the Assessing Officer by, rejecting Foreign Tax Credit should be deleted.
Shri Pavitran Kumar J, learned Sr. AR for Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, as per Rule 128(9) of the I.T. Rules, 1962, filing Form No.67 to claim credit for Foreign Tax Credit is mandatory and said form should be filed on or before the due date of filing the return of income u/s 139(1) of the Act. Since the rule has been amended w.e.f. 2022-23 and this fact has not been considered by the Assessing Officer, the matter may be remanded to the file of the Assessing Officer to verify the claim of the assessee and allow the claim of the assessee for Foreign Tax Credit as per law.
5 ITA.No.649/Hyd./2025 7. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that, the assessee has claimed credit for Foreign Tax Credit in the return of income filed on 07.11.2022 which is on or before the due date specified u/s 139(4) of the Act. The Assessing Officer denied the credit for Foreign Tax Credit for non-filing of Form No.67 on or before the due date specified u/s 139(1) of the Act by considering Rule 128(9) of the I.T. Rules, 1962 which was prevailing in the statute before the amendment by the I.T. Act (27th amendment) Rule 1962 and the same has been notified by the CBDT on 18.08.2022. Further, as per the amended rule 128(9) w.e.f. 01.04.2022 which is applicable from A.Y 2022-23, the statement in Form 67 shall be furnished on or before the end of the assessment year relevant to previous year, in which the income referred to in Sub-Rule (1) has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the specified time as in sub- section (1) or sub section (4) of section 139 of the Act. The 6 ITA.No.649/Hyd./2025 amended Rule is applicable for the assessment year 2022- 23. In the present case, the dispute is also for the assessment year 2022-23. As per the amended Rule, the assessee can file Form 67 before the end of the assessment year relevant to the previous year. In the present case, the assessment year involved is assessment year 2022-23 and end of the assessment year is 31.03.2023. The assessee has filed Form 67 on 07.11.2022, which is well before the due date for furnishing the relevant Form. Although, these facts have been brought to the notice of the learned CIT(A), but the learned CIT(A) rejected the claim of the assessee by considering the pre-amended Rules. Therefore, we are of the considered view that the learned CIT(A) is erred in upholding the reasons given by the Assessing Officer to deny credit for Foreign Tax Credit. Thus, we set aside the order of the learned CIT(A) and direct the Assessing Officer to allow credit for Foreign Tax Credit as claimed by the assessee in the return of income by considering the relevant Form 67 filed on 07.11.2022 indicating the details of income and taxes paid outside India and delete the demand raised by 7 ITA.No.649/Hyd./2025 rejecting the credit for Foreign Tax Credit. We order accordingly.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open Court on 07.07.2025.