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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 26.12.2024 of the Ld. Additional/Joint Commissioner of Income Tax (Appeals)-3, Chennai [“Addl./JCIT(A)”] pertaining to Assessment Year (“AY”) 2019-20.
There is a delay of 03 days in filing of this appeal before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore, in light of the decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 Live Law (SC) 339, condone the said delay and proceed to decide the appeal.
The assessee has raised the following grounds of appeal :-
“Ground No. 1 : On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) has erred in confirming the action of the Ld. Assessing Officer, CPC (Ld. AO) of not allowing Foreign Tax Credit ('FTC') of Rs. 8,57,902 allowable as per Section 90 of the Income Tax Act, 1961 ('Act') read with Article 25 of the India-USA Double Taxation Avoidance Agreement (DTAA') read with CBDT circular 333 dated 02 April 1982, in the Intimation under Section 143(1) of the Act (Act') on the premise that Form 67 in support of FTC was filed beyond the due date of filing of the Return of Income under Section 139(1) of the Act. It is prayed that the Ld. Jurisdictional Assessing Officer (JAO') be directed to allow FTC of Rs. 8,57,902 as the order of the Ld. ADDL/ICIT(A) is contrary to the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The Principal Commissioner of Income Tax as well as several orders of the Hon'ble ITAT as under: Order of the Hon'ble ITAT in the case of Ashish Agrawal vs Income Tax Officer Ward-12(1), Hyderabad (ITA No. 337/Hyd/2023) Order of the Pune Bench of the Hon'ble ITAT in the case of Samiran Arunkumar Dutta vs. DCIT. Circle-12, Pune (ITA No.1195/PUN/2024) Order of the Pune Bench of the Hon'ble ITAT in case of Mr. Deelip Kanhailal Chawla vs. The Income Tax Officer, Ward-1(4), jalgaon (ITA No.87/PUN/2023) Order of the Hon'ble ITAT in the case of Ms. Brinda Ramakrishna vs. The Income Tax Officer, Ward 5(3)(1), Bangalore (ITA No. 454/Bang/2021] Order of the Hon'ble ITAT in case of Ms. Sonakshi Sinha vs. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (ITA No. 1704/Mum/2022) Order of the Hon'ble ITAT in case of Vinodkumar Lakshmipathi vs. CIT(A), NFAC [ITA. 680/Bang/2022] Order of the Hon'ble ITAT in case of Income-tax officer, Ward 1(1), Asansol v. Sandip Choubey (Ι.Τ.Α. No. 742/Kol/2022) It is, therefore, prayed that the Learned Jurisdictional Assessing Officer (Ld. (AO) be directed to grant the FTC of Rs. 8.57,902 Ground No. 2: On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) ought to have held that the non-grant of FTC of Rs. 8,57,902 is not a permissible adjustment under Section 143(1) of the Act as no such adjustment relating to debatable issues can be made in the Intimation under Section 143(1) of the Act It is prayed that the Order of the LA AUDI/JCT(A) in contrary to the following judicial precedents: Order of the Hon'ble ITAT in the case of City Manager Association Vs. DCIT, CPC Bengaluru, (ITA No.1345/Abd/2019): Order of Hon'ble ITAT in the case of Paris Elysees India Private Limited Vs. Deputy Commissioner of Income Tax, Decision of the Hon'ble Supreme Court in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers (P.) Lad (2007) 291 ITR 500. It is, therefore, prayed that the Lat. JAU be directed to allow FTC of Rs. 857,902 Ground No. 3: On the facts and circumstances of the case and in lave, the Ltd. ADDL/ICIT(A) ought to have held the entire 143(1) proceedings as invalid in law as the Li. AO had not followed the provisos to Section 143(1)(a) of the Act of giving opportunity to the Appellant to defend his case. It is prayed that the Order of the L. ADDL/ICIT(A) is contrary to the following Orders of Hon'ble ITAT: Arham Pumps Vs. Deputy Commissioner of income Tax (CPC), Bengaluru (ITA No.206/Ahd/2021) Ernst & Young Merchant banking Services LLP Vs. ADIT, CPC. [ITA No. 2333/Mum/2022] It is, therefore, prayed that the Ld. JAD be directed to allow FTC of Rs.8,57,902. The Appellant craves leave to add amend alter, substitute, withdraw all or any of the above Grounds of Appeal anytime either before or during the bearing of the Appeal.”
4. Briefly stated the facts are that the assessee is an individual. He is employed with Amazon Development Centre (India) Private Limited (”Amazon India”). He moved to USA and started working with Amazon Services LLC (“Amazon USA”) from 17.12.2018. For AY 2019-20, the assessee filed his return of income on 20.03.2020 declaring his global income to tax. During AY 2019-20, the assessee was a Resident and Ordinarily Resident under the relevant provisions of the Income Tax Act, 1961 (the “Act”). Accordingly, salary received by the assessee for the services rendered in USA for the period 17.12.2018 to 31.03.2019 was also offered to tax in India. The assessee also paid tax in USA on salary earned in USA for the period 17.01.2018 to 31.03.2019. Therefore, the assessee claimed Foreign Tax Credit (“FTC”) of Rs.8,57,902/- for taxes paid in USA as per section 90 of the Income Tax Act, 1961 (the “Act”) read with Article 25 of the India-USA Double Taxation Avoidance Agreement. The assessee filed Form 67 on 26.02.2020 in support of its claim of FTC. The return of the assessee was processed u/s 143(1) of the Act on 25.02.2021 by the Central Processing Centre/Assessing Officer (“CPC/AO”) wherein the FTC claimed by the assessee was not allowed on the ground that Form 67 was filed beyond the due date of filing of the return of income u/s 139(1) of the Act. The rectification application filed by the assessee was rejected by the Ld. AO vide order dated 29.04.2021 passed u/s 154 of the Act.
5. Aggrieved, the assessee preferred an appeal before the Ld. Addl./JCIT(A) who upheld the action of the Ld. AO by observing as under : “5.1. The Appellant has filed original Return of Income u/s. 139(1) of the Act for A.Y 2019-20 on 21.03.2020 claiming Foreign Tax Credit (FTC) of Rs. 8,57,902/- and Form 67 was filed on 26.02.2020. However, the same was denied in the order u/s 143(1) of the Act dt 01.06.2022 since Form 67 has not been filed within the due date for filing of Return of Income u/s 139(1) of the Act. The Appellant is aggrieved by the denial of foreign tax credit claimed of Rs. 8,57,902/-. 5.2. The facts of the case and the submission of the Appellant have been carefully perused. It is an admitted fact that Form no.67 has not been filed by the Appellant before the time limit specified u/s.139(1) of the Act for the AY 2019-20 i.e 31.08.2019. Section 90 of the Income Tax Act provides for Double Taxation Relief on the basis of Agreement with foreign countries or specified territories. A mandatory condition for availing Foreign Tax Credit (FTC) is the filing of a Form 67 before the due date of filing of Return of Income under section 139(1) of the Act. As stated above, the Appellant had filed the Return of Income claiming credit for FTC and Form 67 only after the expiry of the prescribed time limit u/s.139(1) of the Act. Therefore, the denial of Foreign Tax Credit is found to be in accordance with the provisions of the Act and hence the Rectification Order by the Jurisdictional Assessing Officer is confirmed. In the result, the Appeal is dismissed.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that the return of income for relevant AY 2019-20 was filed on 20.03.2020. Form 67 was filed on 26.02.2020 by the assessee and intimation order u/s 143(1) of the Act was passed on 25.02.2021 (Pages 83-92 & 95-108 of the paper book refers). Therefore, Form 67 was available with the Ld. AO at the time of processing the return of income of the assessee and passing of intimation order u/s 143(1) of the Act. However, the assessee’s claim of FTC has been denied by the Ld. AO and confirmed by the Ld. Addl./JCIT(A) for the reason that Form 67 was filed beyond the due date of filing of return of income u/s 139(1) of the Act. The Ld. AR submitted that the impugned issue is covered in favour of the assessee by the decision of the Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The Principal Commissioner of Income Tax in W.P. No. 5834 of 2022 and W.M.P. Nos. 5925 and 5927 of 2022, dated 06.10.2023 wherein it has been held that filing of Form 67 is directory in nature and not a mandatory requirement. When Form 67 is available with the Ld. AO at the time of processing of the return u/s 143(1) of the Act, the assessee’s claim of FTC should be allowed. He further submitted that the impugned issue is also covered by the catena of decisions of the Co-ordinate Bench of Pune Tribunal and relied on the following decisions in support thereof : i. Rameshwar Dnyaneshwar Bandewar Vs. ITO, Ward Hingoli (ITA No.2402/PUN/2024) ;
ii. Nandkumar Chandra Vs. ITO Ward-13(1), Pune (ITA No. 2329/PUN/2024); iii. Sandeep Damodar Jadhav vs Income Tax Officer, Ward-3, Satara (ITA No.76/PUN/2025); iv. Samiran Arunkumar Dutta vs. DCIT, Circle-12, Pune (ITA No.1195/PUN/2024; Deelip Kanhailal Chawla vs The Income Tax Officer, Ward 1(4), Jalgaon, v. (ITA No.87/PUN/2023).
The Ld. DR, on the other hand, supported the order of the Ld. Addl./JCIT(A) and the Ld. AO.
We have heard the Ld. Representatives of the parties and perused the material available on record as well as paper book filed by the Ld. AR on behalf of the assessee. We have also considered the judicial precedents cited before us. Undisputedly, the assessee filed its return of income for AY 2019-20 on 20.03.2020. The Form 67 was e-filed and e-verified before filing of return of income on 26.02.2020 (pages 95 to 108 of the paper book refers) for claiming FTC of Rs.8,57,902/-. The return was processed vide intimation order passed u/s 143(1) of the Act on 25.02.2021 denying the claim of the assessee. The assessee filed rectification application on 07.04.2021 u/s 154 of the Act. The FTC was not allowed even in the rectification order u/s 154 of the Act dated 29.04.2021. The claim of the FTC has been denied by the Ld. AO on the ground that Form 67 was filed beyond the due date of filing of return of income u/s 139(1) of the Act which action of the Ld. AO has been confirmed by the Ld. Addl./JCIT(A) in his impugned order.
We find that the impugned issue is no more res-integra and is covered in favour of the assessee by the catena of decisions including the decision of the Co-ordinate Bench of the Pune Tribunal. We have perused the decision of the Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The Principal Commissioner of Income Tax (supra) involving the similar set of facts for AY 2019-20 wherein the Hon’ble High Court held that when Form 67 is available with the Assessing Officer at the time of the processing of return of income u/s 143(1) of the Act the claim of FTC needs to be allowed. Filing of Form 67 is not a mandatory but are directory requirement. The relevant observations and findings of the Hon’ble Madras High Court is as under :
“9. In the present case, the petitioner initially worked at Kenya and subsequently, he became the resident of Indian from the assessment year 2018-2019 and 2019-2020. The petitioner ad-mitted the fact that he has filed his return in India on 10.08.2019. The intimation under Section 143(1) was issued on 26.03.2020. However, he has filed the return without Form-67 which is required to be filed under Rule 128 to claim the benefit of FTC and the same came to be filed on 02.02.2021 which was well before the completion of the assessment year. The intimation under Section 143(1) was issued from the CPC only on 26.03.2021.
10. According to the learned counsel appearing for the respondent, the procedure under Rule 128 is mandatory and and cannot be considered as directory in nature. The petitioner has filed his return including his Kenya income along with his Indian Income tax and claimed the benefits of FTC. However, the petitioner would submit that it is not mandatory. The Rule cannot make anything mandatory and it can be directory in nature, that too before the Assessment, the claim to avail the benefits of FTC is filed. Therefore, it would be the amounts to due compliance under the Act. The petitioner referred to the Judgment of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax, Maharashtra v. G.M.Knitting Industries (P) Limited in Civil Appeal Nos.10782 of 2013 and 4048 of 2014 dated 24.06.2015, wherein it was held that Form 3AA is required to be filed along with the return of income to avail the benefit and even if it is not filed, but the same is filed during assessment proceedings but before the final order of assessment is made that would amount to sufficient compliance.
11. The law laid down by the Hon'ble Apex Court in Commissioner of Income-Tax, Maharashtra v. G.M.Knitting Industries (P) Limited in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015, 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.
13. 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 EB 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.”
We find that there are various decision(s) of the Co-ordinate Benches of the Tribunal where a consistent view has been taken that filing of Form 67 is a procedural/directory requirement and is not a mandatory requirement. We, therefore, disagree with the view of the Ld. Addl./JCIT(A)/AO on the impugned issue. In the case of Rameshwar Dnyaneshwar Vs. ITO (supra) under the identical set of facts, the Pune Tribunal in turn relying on the decision of the Hon’ble Madras High Court Duraiswamy Kumaraswamy’s case (supra) held as under :
“7. I heard the Ld. Departmental Representative and perused the material on record. The issue in the present appeal is that whether or not the CPC, Bangalore is justified in denying the credit for Foreign Tax paid for the reason that the Form No.67 was not filed within the due date for filing of Rameshwar Dnyaneshwar Bandewar the return of income as specified under the provisions of section 139(1) of the Income Tax Act, 1961 ('the Act'). Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 30.03.2021. The CPC, Bangalore had processed the return of income as on 24.12.2021, which means that Form No.67 was very much available with the CPC, Bangalore. Therefore, the CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income under the provisions of section 139(1) of the Act, as it is merely directory in nature. My view is fortified by the judgment of Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The PCIT and others in W.P.No.5834/2022 dated 06.10.2023 wherein it has been held that 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. I further find support from the decision of this Tribunal in the case of Samiran Arunkumar Dutta Vs. DCIT Rameshwar Dnyaneshwar Bandewar -ITA No.1195/PUN/2024 dated 14.08.2024 where also assessee was employed with same employer but Foreign Tax Credit was allowed even when Form No.67 was filed belatedly observing as follows: "7. I heard the ld. Sr. DR and perused the material on record. The issue in the present appeal is that whether or not the CPC, Bangalore is justified in denying the credit for Foreign Tax paid for the reason that the Form No.67 was not filed within the due date for filing of the return of income as specified under the provisions of section 139(1) of the Income Tax Act, 1961 ('the Act'). Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 30.03.2021. The CPC, Bangalore had processed the return of income as on 24.12.2021, which means that Form No.67 was very much available with the CPC, Bangalore. Therefore, the CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income under the provisions of section 139(1) of the Act, as it is merely a directory. Therefore, I direct the CPC, Bangalore to amend the Intimation u/s 143(1) of the Act by taking into consideration the Form No.67 filed by the appellant. Accordingly, the grounds of appeal filed by the assessee stands partly allowed."
8. In light of above, I direct the CPC, Bangalore to amend the Intimation u/s 143(1) of the Act by taking into consideration the Form No.67 filed by the appellant. Accordingly, the grounds of appeal filed by the assessee stands allowed.”
12. Similar view has been taken by the Pune Tribunal in the case of Nandkumar Chandra Vs. ITO (supra) and Sandeep Damodar Jadhav Vs. ITO (supra).
Respectfully following the decision(s) (supra), we set aside the order of the Ld. Addl./JCIT(A) and direct the Ld. AO to allow the impugned credit of FTC to the assessee after due verification of Form 67 in accordance with law. Accordingly, ground No. 1 raised by the assessee is allowed. Ground No. 2 is rendered academic and Ground No. 3 is not pressed/argued and therefore dismissed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 04th December, 2025.