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Facts
The assessee, Ms. Anoosha Paruchuri, filed an appeal against the order denying her claim for Foreign Tax Credit (FTC) of Rs. 5,73,127/-. The denial was based on the grounds that Form 67 was filed belatedly, after the due date for filing the Return of Income.
Held
The Tribunal held that the filing of Form 67 is directory and not mandatory. Relying on various High Court and Supreme Court decisions, it was determined that a delay in filing Form 67 cannot be a sole ground for denying the Foreign Tax Credit.
Key Issues
Whether denial of Foreign Tax Credit is justified solely on the ground of belated filing of Form 67, and if the filing of Form 67 is mandatory or directory.
Sections Cited
143(1), 91, 139(1), 90, 128
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘SM-A’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
(निर्धारण वर्ा/Assessment Year:2021-22) Ms. Anoosha Paruchuri, Income Tax Officer, Vs. Ward-2, Karimnagar. Hyderabad. PAN:BGRPP6667A (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: A. Sharren, Advocate रधजस् व द्वधरध/Revenue by:: Shri Suresh Babu, SR-DR सुिवधई की तधरीख/Date of hearing: 10/03/2025 घोर्णध की तधरीख/Pronouncement: 20/03/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Ms. Anoosha Paruchuri (“the assessee”), feeling aggrieved by the order passed by the Learned ADDL/JCIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. First Appellate Authority”), dated 22.11.2024 for the A.Y. 2021-22.
The assessee has raised the following grounds :
3. The only issue raised in this appeal of the assessee is whether in the facts and circumstances of the case, the Ld. First Appellate Authority is justified in confirming the action of the CPC in denying the Foreign Tax Credit (“FTC”) claimed by the assessee u/s.90 of the Income Tax Act, 1961 ('the Act'), for the reason that the assessee filed Form no.67 beyond the due date of filing of Return of Income (“ROI”) u/s.139(1) of the Act.
The Learned Authorised Representative ("Ld. AR") has submitted that the Ld. AO has denied the FTC only for the reason that the assessee filed Form no.67 belatedly and not within the due date specified for furnishing the ROI u/s.139(1) of the Act as provided under Rule 128(9) of Income Tax Rules, 1962. The Ld. AR has contended that there are various judgments on this point that the filing of Form no.67 within the due date prescribed for filing the ROI u/s.139(1) of the Act is only directory and not mandatory. Therefore, the claim of FTC cannot be denied merely on the ground that the assessee filed Form no.67 belatedly and not within the due date specified for furnishing the ROI u/s.139(1) of the Act. In support of her submission, the Ld. AR has relied upon the decision of CIT Vs. G M Knitting Industries (P) Ltd. 376 ITR 456 (SC) and Duraiswamy Kumaraswamy Vs. PCIT & Ors 460 ITR 615 (Mad) and submitted that the filing of Form no.67 is only directory requirement and delay in filing the same cannot be a ground for disallowance of FTC. Finally, the Ld. AR prayed before the bench to allow the FTC.
Per contra, the Learned Department Representative ("Ld. DR") submitted that, the assessee could not produce the evidence of filing of her ROI in foreign country. Therefore, the assessee is not eligible for FTC. Finally, the Ld. DR prayed before the bench to uphold the order of revenue authorities.
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. There is no dispute that, in the case of assessee, there was a TDS deducted by the foreign government to the extent of Rs.5,73,127/- which was claimed by the assessee as FTC in accordance with section 90 of the Act. The CPC while processing the ROI u/s.143(1) dated 13.10.2022, disallowed the claim of FTC on the ground that the assessee has not filed Form no.67 within the prescribed time limit i.e. 31.12.2021. However, the assessee has filed Form no.67 on 31.03.2022. The assessee has challenged the order of CPC before the Ld. First Appellate Authority, but could not succeed. As far as the contention of the Ld. DR that, the assessee has not filed any evidence of filing of their ROI in foreign country, we have gone through the provisions contained in section 90 and Rule 128 and we do not find any such condition for filing of evidence qua filing of ROI in foreign country for claiming the FTC. We have also gone through decisions of CIT Vs. G M Knitting Industries (P) Ltd. (supra) and Duraiswamy Kumaraswamy Vs. PCIT & Ors (supra) relied on by the Ld. AR. We found that under a similar issue, this Tribunal in the case of Shri Suresh Kumar Vobbilisetty Vs. ITO (International Taxation) in dated 07.03.2025 relying on the said decision of Hon'ble Madras High Court in the case of Duraiswamy Kumarawamy Vs. Ld. PCIT(C) & Ors (supra) at para nos.8 & 9 held as under :
“8. The Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy v. Principal Commissioner of Income-tax, reported in 460 ITR 615 has also held in para 11 to 13 as under: “11. The law laid down by the Hon'ble Apex Court in G.M.Knitting Industries (P) Ltd. (supra), which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FTC, however the same was filed before passing of the final assessment order. The filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. This is what the Hon'ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order.
Further, in the present case, the intimation under section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside.
Accordingly, the impugned order dated 25.01.2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set aside only to the extent of disallowing
of FTC claim made by the petitioner and hence, the first respondent is directed to consider only on the aspect of rejection of FTC claim within a period of 8 weeks from the date of receipt of copy of this order.”
Accordingly, in view of the series of decisions of this Tribunal as well as to maintain the rule of consistency with the decisions of the Coordinate Benches and the decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd vs. CIT reported in (1973] 88 ITR 192 (SC) dated 29-01-1973, in case of divergent views, the precedent in favour of the assessee shall be followed. Hence, in view of the facts and circumstances as discussed above as well as the decisions of this Tribunal, Hon'ble High Court and Hon'ble Supreme Court, we hold that the Foreign Tax Credit cannot be denied merely because there is a delay in filing Form-67. Accordingly, we direct the Assessing Officer to allow the Foreign Tax Credit to the assessee.”
6.1 Accordingly, this Tribunal in the case of Suresh Kumar Vobbilisetty (supra) has held that the FTC cannot be denied, merely because there is a delay in filing Form no.67. Respectfully following the decision of ITAT in the case of Suresh Kumar (supra), we hold that FTC cannot be denied merely there is a delay in filing Form no.67. Therefore, we direct the Ld. AO to allow the FTC to the assessee as per law after verifying the relevant documents. Accordingly, grounds of the assessee are allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 20th March, 2025.