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Facts
The assessee filed their return of income for AY 2022-23, declaring total income and claiming Foreign Tax Credit (FTC). The Assessing Officer (AO) denied the FTC and raised a demand, stating that Form 67 was filed after the due date specified under Section 139(1) of the Act. The CIT(A) upheld the AO's decision.
Held
The Tribunal observed that as per the amended Rule 128(9) of the I.T. Rules, 1962, applicable from AY 2022-23, Form 67 can be filed before the end of the relevant assessment year if the return of income was filed within the Section 139 due date. Since the assessee filed Form 67 on 15/12/2022, which is before 31/03/2023 (end of AY 2022-23), the CIT(A) erred by applying pre-amended rules. The Tribunal directed the AO to allow the Foreign Tax Credit.
Key Issues
Whether Foreign Tax Credit can be denied solely for not filing Form 67 by the original due date under Section 139(1) when the amended Rule 128(9) allows filing till the end of the assessment year.
Sections Cited
143(1), 139(1), Rule 128(9) of I.T. Rules, 1962
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ DB-A ‘ Bench, Hyderabad
Before: Shri Manjunatha, G. & Shri Ravish Sood
(िनधा�रण वष�/Assessment Year: 2022-23) Shri Vishal Negi Vs. Dy. CIT Hyderabad Circle 8 (1) PAN: ABKPN5497R Hyderabad (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri Nikhilesh Kataria, CA राज� व �ारा/Revenue by:: Shri Gurpreet Singh, Sr.AR सुनवाई की तारीख/Date of hearing: 25/06/2025 घोषणा की तारीख/Pronouncement: 30/06/2025 आदेश/ORDER Per Manjunatha, G. A.M This appeal filed by the assessee is directed against the order dated, 18/11/2024 of the learned CIT (A)/Addl./JCIT(A) Udaipur relating to A.Y. 2022-23.
The brief facts of the case are that, the appellant, an individual, filed his return of income for the A.Y 2022-23 on 30/07/2022 declaring total income of Rs.89,74,680/- and claimed foreign tax credit of Rs.49,65,499/-. The return of income
Page 1 of 6 filed by the assessee has been processed and intimation u/s 143(1) of the I.T. Act, 1961 was issued on 26/10/2022 with a demand of Rs.31,07,910/- 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 filed Form 67 on 15/12/2022 which is beyond the due date, when the Assessing Officer passed order u/s 143(1) of the Act on 26/10/2022 in absence of relevant Form 67, 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.
The 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(1) of the Act. The learned Counsel for the assessee further referring to the notification issued by the CBDT dated, 18/08/2022
Page 2 of 6 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 A.Y 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 on 30th July, 2022 on or before the due date of filing the return of income u/s 139 of the Act, however, due to mistake, Form No.67, has been filed on 15/12/2022, after the Assessing Officer passed order u/s 143(1) of the Act on 26/10/2022. These 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 15/12/2022. 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.
On the other hand, the learned Sr. AR 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
Page 3 of 6 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.
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 30/07/2022 which is on or before the due date specified u/s 139(1) 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. 1/4/2022 which is applicable from A.Y 2022-23, the statement in Form 67 shall be furnished on or before the end of the A.Y 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 A.Y has been furnished within the time specified time sin sub-section (1) or sub section (4) of section 139 of the Act. The amended rule is applicable for the A.Y 2022-23. In the present case, the dispute is also for the A.Y 2022-23. As per the amended rule, the assessee can file Form 67 before the end of Page 4 of 6 the A.Y relevant to the previous year. In the present case, the assessment year involved is A.Y 2022-23 and end of the A.Y is 31/03/2023. The assessee has filed Form 67 on 15/12/2022, 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 15/12/2022 indicating the details of income and taxes paid outside India and delete the demand raised by rejecting the credit for Foreign Tax Credit. We order accordingly.
In the result, appeal filed by the assessee is allowed.