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Facts
The assessee filed a return of income declaring a total income and claiming Foreign Tax Credit (FTC). The CPC processed the return and denied the FTC claim. The assessee filed an appeal before the CIT(A), who also denied the claim as Form No. 67 was filed late.
Held
The Tribunal held that filing Form No. 67 on or before the assessment order is passed is a sufficient compliance, and the credit for taxes paid outside India cannot be denied. The Tribunal distinguished the case law relied upon by the Revenue.
Key Issues
Whether the late filing of Form No. 67 beyond the due date for filing the return, but before the assessment order is passed, can lead to denial of Foreign Tax Credit.
Sections Cited
143(1), 139(1), 139(5)
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Income Tax Appellate Tribunal, HYDERABAD “B” BENCH : HYDERABAD
Before: SHRI MANJUNATHA G & SHRI K. NARASIMHA CHARY
ORDER PER MANJUNATHA G, A.M. : This appeal has been filed by the assessee against the order dated 23.10.2024 of the learned Addl/JCIT(A)-10, Mumbai, relating to assessment year 2018-2019.
Brief facts of the case are that the assessee is an individual and filed his return of income on 31.07.2018 for the assessment year 2018-2019 declaring total income of Rs.1,81,12,866/-. The assessee has filed revised return of 2 ITA.No.1367/Hyd./2024 income on 31.03.2019 declaring total income of Rs.1,81,12,866/- and claimed Foreign Tax Credit [in short “FTC”] at Rs.39,16,468/- by filing Form No.67 along with return of income. The return of income filed by the assessee has been processed u/sec.143(1) of the Act by the CPC, Bengaluru and intimation u/sec.143(1) of the Act dated 20.03.2020 was issued by determining the total income of the assessee at Rs.1,81,12,866/- and tax payable at Rs.52,49,340/- by denying FTC of Rs.40,34,724/-.
2.1. The assessee filed an appeal against the order passed by the Assessing Officer/CPC u/sec.143(1) of the Act before the learned CIT(A) and filed revised Form No.67 and claimed credit of tax paid in outside India of Rs.39,16,468/. The learned CIT(A) after considering relevant submissions of the assessee and also taking note of Form No.67, observed that claim of credit for FTC cannot be allowed because the assessee has filed Form No.67 on 30.09.2023, whereas, the Assessing Officer/CPC processed the return of income on 20.03.2020 by that time the relevant Form No.67 was not available to the Assessing Officer/CPC.
3 ITA.No.1367/Hyd./2024 3. Aggrieved by the order of the learned CIT(A), the assessee carried the matter in appeal before the Tribunal.
Learned Counsel for the Assessee, at the time of hearing, submitted that this issue is squarely covered in favour of the assessee by the decision of ITAT, Hyderabad Bench, Hyderabad in the case of Purushothama Reddy Vankireddy, Tirupathi vs. ADIT (Intl. Taxation)-1, Hyderabad ITA.No.526/Hyd./2022, Order dated 05.12.2022 wherein an identical issue has been considered by the Tribunal and after considering the relevant provisions of law including Rule 128(9) of Income Tax Rules, 1963 held that “if relevant Form No.67 is filed on or before the Assessing Officer passes his assessment order, then credit for tax paid in outside India cannot be denied”. In this regard, he relied on the decision of Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT-8, Chennai and others in W.P.No.5834 of 2022, Order dated 06.10.2023.
The Learned DR, on the other hand, supported the order of the learned CIT(A) and submitted that this issue
4 ITA.No.1367/Hyd./2024 is covered in favour of the Revenue by the decision of ITAT Visakhapatnam Bench, Visakhapatnam in the case of Muralikrishna Vaddi vs. ACIT/Dy.CIT reported in [2022] 142 taxman.com 32 [Visakhapatnam-Trib.] wherein the Tribunal by considering the relevant provisions of Rule- 128(9) of the Income Tax Rules, 1962 held that “filing of Form No.67 is mandatory on or before the due date for furnishing return of income u/sec.139(1) of the Act”. In the present case, the assessee has filed return of income beyond the due date specified u/sec.139(1) of the Act and, therefore, the Assessing Officer and learned CIT(A) has rightly rejected the FTC and their orders should be upheld. Learned DR has also taken support from the decision of Hon’ble Supreme Court in the case of PCIT vs. Wipro Limited [2022] 446 ITR 1 (SC) and argued that when law is mandatory for filing certain Forms within the “due date” specified therein, then Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT-8, Chennai and others (supra), erred in holding that “although filing of relevant Form is mandatory, but the time limit within which 5 ITA.No.1367/Hyd./2024 the Form is to be filed is not mandatory, but is directory”. Therefore, he submitted that there is no error in the order of the learned CIT(A) in rejecting FTC claim of the assessee for not filing relevant Form-67 on or before the “due date” and thus, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to Rule 128(9) of the Income Tax Rules 1962 and as per said Rule, for claiming credit for taxes paid in outside India, the assessee should furnish relevant Form No.67 on or before “due date” for filing of return u/sec.139(1) of the Income Tax Act, 1961. The provision of Rule 128(9) has been interpreted by various Benches of the Tribunal and after considering relevant provisions including by considering the decision of Hon’ble Supreme Court in the case of Wipro Limited (supra), held that filing of relevant Form-67 on or before the “due date” of furnishing return of income u/sec.139(1) of the Act is directory in nature and if such Form No.67 is filed on or before the date when the Assessing Officer passed an order,
6 ITA.No.1367/Hyd./2024 then, the Assessing officer is bound to give credit of taxes paid in outside India. The Hon’ble Madras High court in the case of Duraiswamy Kumaraswamy vs. PCIT-8 & Others (supra) has considered identical issue and held that once relevant Form No.67 is filed for claiming FTC before the date when the Assessing Officer passed his assessment order, then, the Assessing Officer is bound to give credit for taxes paid in outside India. Similar issue has been considered by the Co-ordinate Bench of the ITAT Hyderabad in the case of Rishi Khare, Hyderabad vs. ITO, Ward-12(6), Hyderabad in ITA.No.827/Hyd/2024, Order dated 30.12.2024 wherein the Tribunal by considering relevant provisions of the Act has held that “if Form No.67 is filed before the Assessing Officer passed the assessment order, then, it is sufficient compliance of relevant provisions of the Act and the Assessing Officer is bound to give credit to taxes paid in outside India”.
In so far as the case law relied on by the Learned DR present for the Revenue in the case of Muralikrishna Vaddi vs. ACIT/Dy.CIT (supra), we find that although the Coordinate Bench of Visakhapatnam has taken a different
7 ITA.No.1367/Hyd./2024 view, but, in our considered view, when divergent views have been taken by multiple Benches of the Tribunal, then the view which has been taken in favour of the assessee needs to be considered and this principle is supported by the decision Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd., [1973] 88 ITR 192 (SC). As regards the case law relied on by the Learned DR in the case of Wipro Limited (supra), we find that, although Wipro has dealt with the issue of exemption provision provided u/sec.10B of the Income Tax Act, 1961, in our considered view, the ratio laid down by the Hon’ble Supreme Court in the case of Wipro Limited (supra), is not applicable to the facts of the present case because the issue before us is FTC which is altogether different from the issue considered by the Hon’ble Supreme Court and, therefore, in our considered view, the decision rendered by the Hon’ble Supreme Court in the case of Wipro Limited (supra), is not applicable to the facts of the present case. Therefore, we reject the proposition canvassed by the Learned DR.
8 ITA.No.1367/Hyd./2024 8. Considering the facts of the case and also by following the judicial precedents referred to hereinabove, we are of the considered view that the assessee is entitled for credit of FTC in light of relevant Form No.67 filed for the year under consideration. The learned CIT(A) has reached an incorrect conclusion on the basis of revised Form No.67 filed by the assessee on 30.09.2023, even though assessee has filed Original Form No.67 on or before the “due date” prescribed for filing revised return u/sec.139(5) of the Income Tax Act, 1961. Thus, we set aside the order of the learned CIT(A) and direct the Assessing Officer to allow credit for taxes paid in outside India in light of Form No.67 filed by the assessee. Accordingly the grounds of the assessee are allowed.
In the result appeal of the assessee is allowed