AQUATECH SYSTEMS (ASIA) PRIVATE LIMITED,PUNE vs. CIRCLE 1(1), PUNE, PUNE

The captioned appeal at the instance of assessee relating to A.Y. 2016-17 is directed against the order dated 23.12.2024 framed by Addl./JCIT(A)-6, Chennai u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) arising out of Assessment Order dated 12.12.2018 passed u/s.143(3) of the Act.

Though the Registry has mentioned that the appeal is delayed by 4 days, we on perusal of the submissions filed by the assessee find merit in the same and notice that the impugned order dated 23.12.2024 was communicated to the assessee on the very same date and as per the revised time limit provided in the Finance Act, 2024 applicable from 01.10.2024, appeal before this Tribunal shall be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee arising out of Principal Commissioner of Income- tax/Commissioner of Income-tax, as the case may be. Accordingly, since the impugned order was passed on 23.12.2024, two months period shall be calculated from 01.01.2025 and the same ends on 28.02.2025. We notice that the assessee has e-filed the appeal on 25.02.2025 and therefore there is no delay in filing of the appeal. We proceed to adjudicate the appeal on merits of the case.

The sole grievance of appeal raised by the assessee is that ld.CIT(A) erred in not granting the credit for Foreign Tax to the extent of Rs.50,02,154/-.

Ld. Counsel for the assessee submitted that the return of income was filed claiming Foreign Tax Credit (FTC) of Rs.25,06,526/-. Subsequently, it was realised that FTC of Rs.50,02,154/- remained to be claimed and the same was filed before the AO which was denied. Ld.CIT(A) also denied the claim by observing that assessee has not filed Form No.67 on or before the due date specified u/s.139(1) of the Act. He submitted that provisions of Rule 128(8) and 128(9) of the Income-tax Rules, 1962 have been inserted from 01.04.2017 onwards and are not applicable to the assessee as the year under appeal is for F.Y. 2016- 17. Even otherwise filing of Form No.67 is directory in nature and the Revenue authorities ought to have accepted the assessee’s claim of FTC after necessary verification. Reliance placed on various decisions mentioned in the case law paper book along with the decision in the case of KEC International Limited Vs. DCIT and vice versa in & 4022/Mum/2023 and and 4078/Mum/2023 dated 03.05.2024.

On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.

We have heard the rival submissions and perused the record placed before us. The grievance of the assessee is that ld.CIT(A) erred in not allowing the claim of FTC of Rs.50,02,154/- which was deducted for the foreign income earned in China. We observe that the alleged claim of FTC was not made in the income-tax return filed for the year under consideration. The said claim was made during the course of assessment proceedings during which the assessee realised that FTC on certain income disclosed in the financial statements had remained to be claimed. Assessee observed that the FTC in relation to certain Technical Services provided to Aquatech (Guangzhou) Water Treatment Co. Limited (Aquatech China) with respect to SHNM Hero Project against Invoice of USD 7,74,976.30 raised on 30.09.2015 and duly accounted for in the Revenue for the year under consideration, the tax deducted at source @10% USD 77497.63 in China for which TDS certificate was issued on 19.06.2017 could not be claimed in the income-tax return. Ld.CIT(A) has rejected the assessee’s claim solely on the ground that assessee has not furnished Form No.67 on or before the due date specified u/s.139(1) of the Act. Before us, Ld. Counsel for the assessee contended that Rule 128(8) and 128(9) of Income- tax Rules, 1962 have been brought into the Rules from 01.04.2017 and therefore prior to 01.04.2017 there was no provision of Form No.67 for availing Tax Credit. This contention of the assessee is duly supported by the decision of Coordinate Bench, Mumbai in the case of KEC International Limited (supra) and the relevant finding of this Tribunal reads as under :

The above decision of the Tribunal (supra) is squarely applicable on the facts of the instant case. We also note that filing of Form No.67 even though was not necessary in the case of assessee for A.Y. 2016-17 but still filing of such Form No.67 has been held to be directory in nature and not mandatory. We find support from the decision of Coordinate Bench in the case of Sonakshi Sinha Vs. CIT in order dated 20.09.2022. In light of the discussion made hereinabove, we are of view that the claim of the assessee for FTC of Rs.50,02,154/- deserves to be accepted, however due credit for FTC may be granted by Jurisdictional Assessing Officer when all necessary details are furnished before him by the assessee for necessary examination and verification for which reasonable opportunity should be granted to the assessee. Grounds of appeal raised by the assessee are allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes.