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Facts
The assessee, an employee of an Indian company, also earned salary income from Denmark. The assessee claimed Foreign Tax Credit (FTC) for Danish taxes paid, but the claim was denied for not filing Form 67 before the due date for filing the return of income. The assessee filed Form 67 after the due date but before the processing of the return.
Held
The Tribunal held that filing Form 67 is a procedural and directory requirement, not mandatory. Therefore, the disallowance of FTC solely on the ground of delayed filing of Form 67 is not sustainable, especially when the Double Taxation Avoidance Agreement (DTAA) overrides the Act.
Key Issues
Whether the disallowance of Foreign Tax Credit (FTC) for non-compliance with the procedural requirement of filing Form 67 within the prescribed time limit is justified, especially in light of the India-Denmark DTAA.
Sections Cited
90, 91, 139(1), 139(4), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
The appeal filed by the assessee is directed against the order dated 21.10.2024 of the Ld. Additional/Joint Commissioner of Income Tax (Appeals)-2, Surat [“Addl./JCIT(A)”] pertaining to Assessment Year (“AY”) 2020-21.
The assessee has raised the following grounds of appeal :-
1. The learned CIT(A), ADDL/JCIT(A)-2 Surat "CIT(A)"; erred in law and on facts in upholding intimation u/s 143(1) dated 31/03/2021 passed by CPC Bangalore thereby denying the foreign tax credit of Rs.2,65,353 pertaining to the foreign sourced salary income of Rs.9,64,430 which is doubly taxed, i.e., in Denmark as well as India.
2. The lower IT authorities ought to have appreciated that. - Rule 128(9) of the IT Rules does not provide for disallowance of FTC in case of delay in filing Form No.67. - Filing of Form No.67 is NOT mandatory but a directory requirement. - DTAA overrides the provisions of the Act, and the Rules cannot be contrary to the Act.
3. The appellant craves leave to add/modify/ amend /delete all / any of the grounds of appeal.”
3. Briefly stated, the facts of the case are that the assessee is an individual who is a salaried employee working with Larsen & Toubro Infotech Limited, India. For AY 2020-21, the assessee filed her return of income on 31.03.2021 declaring total income of Rs.16,17,620/-. For the relevant AY, the assessee’s residential status has been declared to be a resident Indian. During the relevant AY 2020-21, the assessee earned salary income from Denmark as well as from India. Out of the total salary of Rs.21,36,616/- an amount of Rs.9,64,430/- was earned from a Denmark. The assessee claimed Foreign Tax Credit (“FTC“) u/s 90 of the Income Tax Act, 1961 (the “Act”) amounting to Rs.2,65,353/- in Form 67 filed on 19.04.2021. The return of the assessee was processed u/s 143(1) of the Act on 24.12.2021 by the CPC, Bengaluru (“AO”) and intimation was issued as per which FTC of Rs.2,65,353/- of the assessee’s Denmark salary income was not considered since Form 67 was not filed before due date of filing the return of income u/s 139(1) of the Act for AY 2020-21 which was 31.07.2020, subsequently, extended to 10.01.2021. The due date for filing of belated return u/s 139(4) of the Act was 31.05.2021. The claim of FTC was denied by the Ld. AO even though Form 67 was filed on 19.04.2021 before return was processed by the Ld. AO which is on 24.12.2021.
4. Aggrieved, the assessee filed an appeal before the Ld. Addl./JCIT(A) who confirmed the order of the Ld. AO on the ground that the assessee failed to furnish Form 67 on or before the due date for furnishing the return prescribed u/s 139(1) of the Act.
4.1 Before the Ld. Addl./JCIT(A), the assessee submitted that section 90 of the Act r.w. Article 23 of Double Taxation Avoidance Agreement between India and Denmark (“India-Denmark DTAA”), the claim of FTC cannot be disallowed for non-compliance of procedural requirement prescribed under Rule 128 of the Income Tax Rules, 1962 (“the Rules”). Relying on the decision of the Hon’ble Supreme Court in the case of Azadi Bachao Andolan (2003) 263 ITR 70 (SC) it was submitted that the DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. The assessee further placed reliance on the cases of :- (i) CIT Vs. Eli Lily & Co (India) P Ltd. (2009) 178 Taxman 505 (SC); (ii) GE India Technology Centre P Ltd. Vs. CIT (2010) 193 Taxman 234 (SC) and (iii) Engineering Analysis Centre of Excellence P Ltd. Vs. CIT (2021) 125 taxmann.com 42 (SC) and CBDT Circular No. 333 dated 2/4/82 137 ITR (st.) in support of the above contention.
4.2 The contentions raised by the assessee did not convince the Ld. Addl./JCIT(A) who denied the relief of FTC to the assessee by observing as under : “4.3 I have gone through ground of appeal, statement of facts and written submission of the appellant as well as the order passed u/s. 143(1) of the Act. The assessee filed her return of income for A.Y. 2020-21 on 31.03.2021 beyond extended due date as prescribed u/s 139(1) of the IT Act claiming Foreign Tax Credit under section 91 of the Act for the due taxes paid in the Denmark. The CPC has disallowed the claim of Foreign Tax Credit while passing the Intimation under section 143(1) of the Act. It is observed that the CPC has rejected the claim of appellant made u/s 91 with regard to Foreign Tax Credit amount of Rs.2,65,353/- on the basis of delayed filing of necessary Form No. 67 being form for Statement of income from a country or specified territory outside India and Foreign Tax Credit. As per Rule 128 of the Income Tax Rules, 1962, a resident taxpayer is eligible to claim credit for any foreign tax paid, in a country or specified territory outside India. However, the credit shall be allowed only if the assessee furnishes the required particulars in Form 67 with the specified timelines. A resident taxpayer who has credit for the amount of any foreign tax paid in a country outside India by way of deduction or otherwise will be required to furnish the statement in Form 67 on or before the due date specified for furnishing the return of income under sub-section (1) of Section 139 to claim credit of such taxes. In the instant case, the appellant filed and uploaded the Form No. 67 on 19.04.2021, beyond the due date specified for furnishing the return of income under sub-section (1) of Section 139 of the Act, which was on or before 10.01.2021 for A.Y. 2020-21. The appellant has relied upon judgments of the various Tribunals etc. As per the Hon'ble Supreme Court's judgment in the case of Commissioner of Customs (Import), Mumbai v. M/s Dilip Kumar and Company & Ors., 2018 (361) Ε.Ε.Τ. 577 (SC), it is axiomatic that taxation statute has to be interpreted strictly because State cannot at their whims and fancies burden the citizens without authority of law. In other words, when competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the Legislature. In a taxing statute, one has to look at what is clearly said. There is no equity about a tax. There is no intendment. There is no presumption as to tax. Nothing is to be read in, nothing to be implied. 4.4. In view of the above, I find that the CPC is correct for not giving Foreign Tax Credit under section 91 of the Act of Rs.2,65,353/- while passing the Intimation under section 143(1) of the Act, which is in accordance with provisions laid down in the Act. Thus, the grounds of appeal are not sustainable and hence are dismissed.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that the impugned issue is squarely covered in favour of the assessee by catena of judicial precedents pronounced by various Benches of the Tribunal. He reiterated the contentions raised before the Ld. Addl./JCIT(A) and cited the following case laws in support of the assessee’s claim on allowability of FTC (Pages 75 to 129 of the Paper Book-I refers): i. Akshay Rangroji Umale vs DCIT in ii. Saurabh Gaur vs DCIT in iii. Brinda Ramakrishna vs ITO in ITA No. 454/Bang/2021 iv. Sonakshi Sinha vs CIT(A) NFAC in ITA No. 1704/Mum/2022 v. Atanu Mukherjee vs ITO in ITA Νο. 439/Kol/2022 vi. Suresh Kumar Doodi vs ACIT in ITA No. 164/JP/2023 vii. Naga Siva Kumar Kondri vs ITO (Intl. Taxn.) in ITA No. No.213/Viz/2022
The Ld. DR, on the other hand, supported the order of the Ld. AO/ Ld. Addl./JCIT(A).
We have considered the submissions of the Ld. Representatives of the parties and perused the material available on record and also various judicial precedents relied upon the assessee. It is evident that the solitary ground of denial of claim of assessee for FTC in the relevant AY under consideration is the delay in filing of Form 67. It is an admitted position that the assessee filed Form 67 on 19.04.2021 and the return of income for the relevant AY 2020-21 was filed u/s 139(4) of the Act on 31.03.2021 within the due date for filing return of income which was 31.05.2021. The assessee filed Form 67 (on 19.04.2021) before the return for the relevant AY was processed u/s 143(1) of the Act by the Ld. AO (on 24.12.2021). The Ld. Addl./JCIT(A) has upheld the intimation order of the Ld. AO for the reason that Form 67 was uploaded by the assessee beyond the due date specified for furnishing the return of income u/s 139(1) of the Act which was on or before 10.01.2021 for AY 2020-21. On perusal of various decisions cited by the assessee, we find that the Co-ordinate Benches of the Tribunal have held that filing of Form 67 is a procedural/directory requirement and not a mandatory one. In our considered view, reliance placed by the Ld. CIT(A) on the decision of Hon’ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. M/s. Dilip Kumar and Company & Ors., 2018 (361) E.L.T. 577 (SC) is completely misplaced as this decision was rendered in different context and not with respect to the claim of FTC. Rather, we find force in the contention of the Ld. Counsel for the assessee which is supported by various judicial precedents in respect thereto that as per section 90 of the Act r.w. Article 23(2)(a) of the India-Denmark DTAA the claim of FTC cannot be disallowed for non- compliance of the procedural requirement prescribed under the Rules. The Rules nowhere provides that if Form 67 is not filed within the prescribed time limit the relief sought by the assessee u/s 90 of the Act would be denied.
In the light of the factual and legal position enumerated above and respectfully following the decisions (supra) of the various Benches of the Tribunal including the Pune Bench of the Tribunal and in the absence of any contrary decision brought on record by the Revenue, we set aside the order of the Ld. Addl./JCIT(A) and direct the Ld. AO to allow the impugned claim of FTC to the assessee, in accordance with law after due verification of Form 67 filed by the assessee. The grounds raised by the assessee are accordingly allowed for statistical purposes. We direct and order accordingly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29th April, 2025.