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Facts
The assessee filed an appeal before the CIT(A) beyond the prescribed time limit by 119 days. The CIT(A) refused to condone the delay, holding the reasons insufficient, and dismissed the appeal in limine. The assessee had sought relief under Section 90 for foreign salary income earned in Norway, with tax paid in Norway and Form 67 filed belatedly.
Held
The Tribunal held that the delay in filing the appeal before the CIT(A) was not intentional or wilful and was of a short duration (under four months). It further held that the denial of Foreign Tax Credit (FTC) solely on account of delay in filing Form 67 is unjustified, as Form 67 is a procedural requirement and not mandatory, and DTAA provisions override the Act.
Key Issues
Whether the appeal was liable to be dismissed in limine due to delay in filing, and whether Foreign Tax Credit can be denied solely on account of delayed filing of Form 67.
Sections Cited
154, 90, 128(9)
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M: This appeal is directed against the order dated 22.10.2024 passed by the Ld. CIT(A), NFAC, Delhi for the Assessment Year 2020–21, whereby the appeal of the assessee was dismissed on the ground that the same was filed beyond the prescribed time limit and the reasons for delay were not found acceptable.
The facts in brief are that the assessee filed rectification application under section 154 of the Act seeking relief under section 90 of the Income-tax Act, 1961 on account of foreign salary income earned in Norway and the corresponding filing of Form 67. The same was rejected by the CPC vide order dated 29.07.2022. The assessee thereafter filed an appeal before the CIT(A) on 24.12.2022, resulting in a delay of 119 days.
The Ld. CIT(A) refused to condone the delay, holding that the explanation offered was not sufficient and the reasons were casual in nature. Consequently, the appeal was dismissed in limine, without adjudicating the grounds of appeal on merits.
Before us, the Ld. Counsel for the assessee submitted that the delay was neither intentional nor wilful and that the assessee had a bona fide claim supported by requisite documentary evidence including Form 67 and DTAA provisions. It was submitted that A. The foreign salary income was fully disclosed in the Indian tax return. B. Tax had been duly paid on the foreign income in Norway. C. Form 67 had been filed, albeit belatedly, before the completion of assessment proceedings. D. The denial of FTC merely on account of delay in filing Form 67 was unjustified, especially when the substantive conditions under section 90 read with the DTAA were fulfilled. E. The Ld. Counsel heavily relied on the decision of the Hyderabad Bench of the Tribunal in the case of **CES Limited vs DCIT**, wherein it was held that **filing of Form 67 is directory and not mandatory**, and that FTC cannot be denied merely on procedural lapses.
Per contra, the Ld. DR relied on the orders of the lower authorities.
We have heard the rival contentions and carefully gone through the record. In our considered view, the approach adopted by the Ld. CIT(A) in dismissing the appeal merely on the ground of delay, without addressing the claim on merits, has resulted in denial of substantial justice. The explanation for the delay, indicates that the assessee took steps upon realization of the error and promptly approached counsel thereafter. The length of delay, being just under four months, is not so unreasonable as to shut the doors of appellate review altogether, particularly where a substantial tax relief is being claimed. In view of the above, we are of the opinion that the delay in pursuing the remedy before the Ld. CIT(A) is required to be condoned. In variably we would have remanded back the matter to the file of the Ld. CIT(A) however considering the issue being settled by the various Tribunal orders, we deem it appropriate to deal the issue at the Tribunal level itself.
6.1 The parties have argued the matter on merits and the Ld. AR relied upon the various judgements which hitherto will be referred by us. We have heard both parties and carefully perused the records. The core issue before us is whether the benefit of FTC under section 90 of the Act can be denied solely on the ground of delay in filing Form 67, even though the relevant income was offered to tax in India and the tax was duly paid in the source country.
6.2 This issue is no longer res integra. The Coordinate Bench of the Tribunal in the case of CES Limited vs. DCIT in under identical facts and circumstances, allowed the claim of the assessee. The relevant portion of the order is reproduced below:
We agree with the contentions put forth by the learned counsel for the assessee and hold that Rule 128(9) of the 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 and DTAA overrides the provisions of the Act and Rules cannot be contrary to the Act. Before me, ld. AR submitted that the case is already covered in favour of the assessee and filed the orders of Tribunal wherein the Tribunal gave decision in favour of assessee, including the order in ITA No.337/Hyd/2023. Further, the said decisions are not stayed or over-ruled by any of the higher Judicial Forums. In view of the above circumstances, I respectfully following the decision of the co- ordinate Bench of the Tribunal passed in the case of Ashish Agarwal Vs. ITO in dt.26.09.2023, allow the appeal. Thus, the appeal of the assessee is allowed 6.3 This decision is further supported by similar rulings of the Jaipur Bench in Suresh Kumar Doodi vs ACIT in ITA No. 164/JP/2023 and others, all holding that Form 67 is a procedural requirement , and FTC should not be denied where the assessee has fulfilled the substantive requirements of section 90 and DTAA provisions.
6.4 Accordingly, the delay in filing the appeal before the Ld. CIT(A) is condoned. The impugned order of the Ld. CIT(A) dated 22.10.2024 is hereby set aside, and the appeal of the assessee is allowed.