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Facts
The assessee claimed Foreign Tax Credit (FTC) of Rs. 13,08,667 for taxes paid in Denmark. However, the claim was denied because Form 67 was filed beyond the due date for furnishing the income tax return.
Held
The Tribunal held that Rule 128(9) of the Income Tax Rules does not mandate disallowance of FTC for delayed filing of Form 67, considering it a directory rather than a mandatory requirement. The Tribunal also noted that Double Taxation Avoidance Agreements (DTAA) override the Act and rules. Therefore, the assessee is eligible for FTC.
Key Issues
Whether the delay in filing Form 67 fatal to the claim of Foreign Tax Credit, despite the DTAA provisions and the nature of the rule as directory.
Sections Cited
139, 90, 143(1), 154, 119, 128
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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
PER KUL BHARAT, VICE PRESIDENT.:
This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 18.06.2023, pertaining to the assessment year 2019-20. The assessee has raised the following grounds of appeal: - “Ground No. 1: Non grant of Foreign Tax Credit (‘FTC’) of Rs. 13,08,667 On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in confirming the action of the Ld. Assessing Officer CPC (Ld. AO) of not allowing Foreign T: Credit (‘FTC’) of Rs. 13,08,667/- on the premise that Form 67 was filed beyond the date of furnishing the Return of Income under Section 139(1) of the Income Act, 1961 (‘the Act’). It is prayed that the Ld. Jurisdictional Assessing Officer (AO) be directed to grant the FTC of Rs, 13,08,667 as the action of the Ld. AO as well as the Ld. CIT(A) is contrary to Section 90 of the Act, read with Article 23 of the India Denmark Double Taxation Avoidance Agreement ((DTAA’), read with Circular 333 dated 2nd April 1982, read with various orders of the Hon'ble Income Tax Appellate Tribunal including the following:
Ms. Brinda Ramakrishna vs. The Income Tax Officer, Ward 5(3)(1), Bangalore (ITA. No. 454/Bang/2021) Bhaskar Dutta Vs DCIT Int. Tax-1(2)(2), New Delhi. (ITA No.1869/Del/2022) Sonakshi Sinha Vs Commissioner of Income-tax (Appeals) National Faceless Appeal Centre (NFAC) Delhi (ITA No. 1704/Mum/2022) 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 hearing of the Appeal.”
2. The facts giving rise to the present appeal are that the assessee is aggrieved for not giving set off of Foreign Tax Credit (“FTC”). The assessee in this case had filed an application seeking rectification of the adjustment made u/s 143(1) of Income Tax Act, 1961 (hereinafter referred as to the “Act”) thereby declining the claim of Foreign Tax Credit (“FTC”). The application as filed u/s 154 of the Act was rejected. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) who sustained the finding of the Assessing Authority on the basis that the assessee failed to file Form No. 67 within the time prescribed by law. Now the assessee is in appeal before this Tribunal.
Apropos to the grounds of appeal, the Ld. Counsel for the assessee contended that the only grievance of the assessee is with regard to declining the claim of foreign tax credit amounting to Rs.13,08,667/- on the premise that Form No. 67 was filed beyond the date of furnishing the return of income u/s 139(1) of the Act. He contended that the issue is squarely covered in favour of the assessee and the Jurisdictional Assessing Officer be directed to grant the FTC. He also contended that the decision of the lower authorities is contrary to the provisions embodied in Section 90 of the Act, read with Article 23 of the India Denmark Double Taxation Avoidance Agreement (“DTAA”). He further Page 3 of 14 submitted that the CBDT Circular No. 333 dated 2nd April, 1982 and other decisions of the Co-ordinate Benches of this Tribunal support the case of the assessee. He drew our attention to the relevant contents of the impugned order and also decisions relied by him.
On the other hand, the Ld. DR opposed the submissions and supported the orders of the lower authorities. He also contended that the FTC would not be available as the provisions are clear for making such claim in Form No. 67 within the prescribed time. The failure of the assessee for filing the requisite Form No. 67 within the time as mandated u/s 139(1) of the Act, disentitled him for raising such claim after the prescribed time is expired.
We have heard the rival contention and perused the materials available on record and gone through the orders of the lower authorities. The only controversy in this case is with regard to FTC, there is no quarrel sofar the issue of offering the income earned outside India for taxation. The only issue is with regard to giving set off of the taxes paid in the other jurisdiction, in the present case is Denmark. We find that the Ld. CIT(A) has considered the submissions of the assessee and decided the issue against him by observing as under: - 4.7. Therefore, the rules and procedures for claiming Foreign Tax Credit were put in place since the year 2017 and it was clearly emphasized therein that & was mandatory to file Form 67 on or before the specified due date for furnishing of income u/s.139(1) of the Act. It was therefore, incumbent upon an assessee seeking to claim Foreign Tax Credit to file the return of income as well as Form 67 on or before the prescribed due date under section 139(1) of the income Tax Act, 1961. This position continues to apply for all cases in which claim for Foreign Tax Credit has been made till end of FY.2021-22. 4.8. it is further seen that some relaxations in the above requirement have been granted subsequently by CBDT but only to those claims of FTC that were made during FY.2022-23, for which the provisions of Rule 128 have been amended with effect from 01.04.2022, vide CBDT Notification 100 of 2022 dt Aug 18 2022 whereby CBDT has extended the time limit for furnishing Form No. 67 at the end of the AY in which the foreign sourced income is offered to tax or is assessed to tax in India, where the return for such AY has been furnished within the time-limit specified under Section 139(1)/139(4); Further, where an updated return is filed under Section 139(8A), Form No. 67 shall be furnished on or before the date on which updated return is furnished to the extent it relates to the income included in the updated return. However, as noted earlier, these amended provisions are applicable only to those claims of FTC filed during FY.2022- 23 and not to those cases where such claims were filed prior to that. MINISTRY OF FINANCE (Department of Revenue) [CENTRAL BOARD OF DIRECT TAXES] NOTIFICATION New Delhi, the 18th August, 2022 INCOME TAX G.S.R. 636(E). – In exercise of the powers conferred by clause (ha) of sub-section (2) and sub-section (4) of section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the income-fax Rules, 1962, namely: - 7. Short title and commencement. — (1) These rules may be called the Income-tax (27” Amendment) Rules, 2022. (2) They shall be deemed to have come into force from tat day of April, 2022. 2 In the income-tax Rules, 1962, in rule 128, for sub-rule (9) the following sub-rule shall be substituted, namely: - (9) The statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred to in sub-rule (1) has been offered to tax or assessed to fax in India and the return for such assessment year has been furnished within the time specified under sub- section (1) or sub-section (4) of section 139: Provided that where the return has been furnished under sub-section (8A) of section 139, the statement in Form No. 67 referred to in clause (i) of sub- rule (8) and the certificate or the statement referred to in clause (ii) of sub- rule (8) to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished. [Notification No. 100/2022/F. No. 370142/35/2022-TPL] Explanatory Memorandum: This amendment is effective from the 1™ day of April, 2022 so that it applies to all the claims of foreign tax credit furnished during the financial year 2022-2023. it is hereby certified that no person i.e being adversely affected by giving retrospective effect to this rule. Note: The principal rules were published in the Gazette of India, Extraordinary, Part-ll, Section-3, Subsection (ii) vide number S.O. 969 (E) dated the 26. March, 1962 and last amended vide notification number G.S.R 634 (E) dated 17 August, 2022." 4.10. As the amendment in the rule is with a specified anterior date effective from 01.04.2022, it is not applicable to the appellant's case in which the claim for FTC was made prior to the effective date. The pre- amended sub rule (9) as existed then for the relevant assessment year 2019-20 is, therefore, squarely applicable to appellant’s case. The case laws cited by the appellant which were rendered in the pre-amendment period are therefore, distinguishable. 4.11. On the similar issue of delay in filing of Form 10B and condonation thereof vis a vis the circulars issued by CBDT in exercise of powers vested under section 119(2)(a) of the Income Tax Act, 1961 came up before the Hon’ble High Court of Judicature at Bombay in the case of Little Angels Education Society Vs Union of India and Others and Rev. c. F. Andrews Education Society (Regd) Vs Union of India and others in Wirt Petition No.1061 & 1288 of 2020 respectively. The Hon’ble High Court, after considering the above circulars, has upheld the validity of CBDTs circulars in the matter and also their due compliance by the sub-ordinate authorities with the following observations - “17. Section 11 which deals with income from property held for charitable or religious purposes provides that the categories of income mentioned there under shall not be included in the total income of the previous year of the person in receipt of the income. On the other hand, section 12 deals with income of trusts or institutions from contributions. Section 12A lays down the conditions for applicability of sections 11 and 12. As per Rule 17B the report of audit of accounts of a trust or institution which is required to be furnished electronically under clause (b) of section 12A shall be in Form No.108. In other words, where the total income of the trust or institute as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax in any previous year. The accounts of the trust or institution for that year should be audited by an accountant as defined in the explanation below sub-section (2) of section 288 which should then be furnished along with the return of income for the relevant assessment year.
Before we advert to the impugned order, it would be apposite to deal with section 119 of the Act which confers power upon the CBDT to issue instructions and directions to other income tax authorities as t may deem fit for proper administration of the Act which are required to be observed and followed by the income tax authorities. Section 119(2)(b) is relevant and the same is extracted hereunder. – “Section 119(2)(a) ... (b) the Board may, if it considers it desirable or expedient so fo do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize any income-tax authority, not being a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law.”
From the above, we find that CBDT if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases by general or special order, authorize any income tax authority, not being a Commissioner (Appeals), to admit an application or claim for any exemption, deduction, refund or any other relief under the Act after the expiry of the period specified under the Act for making such application or claim and deal with the same on merit in accordance with law. Thus, in an appropriate case CBDT can pass a general order of @ special order; by such an order & can authorize any income tax authority not being a Commissioner (Appeals) which would include Commissioner of Income Tax (Exemptions); to admit an application or claim for any exemption etc. after expiry of the period specified under the Act; and to deal with the same on merit in accordance with law.
Having noticed the above, we may now examine Circular No.2/2020 dated 03.01.2020 issued by the CBDT. The subject of the circular is condonation of delay under section 119(2)(b) of the Act in filing of Form No.108 for the assessment year 2018-19 and subsequent years. Referring to the earlier circulars issued by the CBDT, it was noticed that the delay in filing Form No.10B for the assessment year 2016-17 and assessment year 2017-18 in all such cases where the audit report for the previous year had been obtained before filing of return of income and had been furnished subsequent to the filing of the return of income but before the dates specified under section 139 of the Act should be condoned; in all other cases of belated applications in filing Form No.10B for assessment years prior to assessment year 2018-19, Commissioners of Income Tax have been authorized to admit and dispose of such applications by 31.03.2020. While entertaining such belated applications, Commissioners should satisfy themselves that the assessees were prevented by reasonable cause from filing such application within the stipulated time.
As per the above it has been decided by the CBDT that when there is delay of up to 365 days in filing Form No.10B for assessment year 2018- 19 or for any subsequent assessment years, Commissioners of income Tax have been authorized to admit such belated applications for condonation of delay under section 119(2) of the Act and to decide the same on merit. It has further been clarified that while entertaining such belated applications, Commissioners of income Tax should satisfy themselves that the assessees were prevented by reasonable cause from filing such applications within the stipulated time. Thus, by the above Circular No.2 of 2020, CBDT has issued general order under section 119(2)(b) empowering the Commissioners of income Tax to condone delay in filing Form No.10B for the assessment year 2018-19 or for any subsequent assessment years. 23. Commissioner noted that petitioner had filed return of income on 15.08.2018 and revised return of income on 30.03.2019. Form No.10B was filed on 06.11.2019. Form No.10B was required to be filed within the due date of filing of return, in this case 31.10.2018. There was thus delay of more than 365 days in filing Form No.108. Referring to the Circular dated 03.01.2020, Commissioner noted that CBDT has delegated the power to the Commissioner to admit belated applications in filing Form No.10B for the assessment year 2018-19 and onwards for a period of only up to 365 days. Since in this case the delay is more than 365 days, Commissioner expressed inability to condone the delay and hence rejected the application for condonation of delay. 24. We do not find any error or infirmity in the view taken by the CBDT vide Circular No.2 / 2020 or by the Commissioner while passing the impugned order dated 19.02.2020 Fixing a period of one year’s delay i.e., 365 days of delay for condonation of delay in filing Form No.10B for the assessment year 2018-19 and onwards cannot be said to be arbitrary or irrational. Therefore, the general order passed by the CBDT in this regard under section 119(2)(b) cannot be faulted.”
4.12. Thus, once a specific course of action has been laid down by the competent authority under the Act, it is not open for the subordinate authorities to ignore such procedures. it may be beneficial to refer to the decision of the Hon’ble Supreme Court in the case of Barium Chemicals Limited and Another v. The Company Law Board and Another AIR 1967 SC 295 wherein it is held at paragraph 36 as follows: *..Prima facie, a discretion conferred by a statute on any authority is intended to be exercised by that authority and by no other.” 4.13. The discretion to condone delay in filing of Form 67 does not vest with the AO or CPC or any other subordinate authority except to the extent as provided for by the CBDT in exercise of its powers conferred under the Act. Clearly the case of the appellant does not fall within such relaxation provided for by CEDT. For the detailed reasons as stated above, non- granting of FTC by CPC is found to be strictly in accordance with law as applicable to the undisputed facts of the case. 4.14. The claim for benefit of tax relief was made by the appellant and therefore the primary onus is on the appellant to comply with the statutory requirements, as held by the Hon’ble Bombay High Court in the case of Commissioner of income-tax v. Shivanand Electronics 209 ITR 63 as under: “When the Legislature casts a duty on the assessee claiming certain benefit, to comply with requirements which are associated with such benefit, the assessee cannot get the benefit without doing his part of the duty. He cannot be allowed to say that was for the ITO to ask him to do so. If the assessee does not do his part of the statutory duty, the [TO may proceed to decide the allow ability or otherwise of the relief on the basis of the facts and material available before him.” 4.15.in view of the above facts and provisions of law, the intimation issued u/s.143(1)/154 by CPC does not warrant any interference on the issue. Appellant’s Ground No.1 to 3 are dismissed accordingly. In the result, the appeal is “dismissed”.
The assessee has relied upon the various case laws on the strength of such precedents, Ld. Counsel for the assessee submits that the Assessing Officer be directed to grant credit of foreign tax as alternatively the matter may be restored to the Assessing Officer for verification. The Tribunal in the case of Ms. Brinda Ramakrishna vs Income Tax Officer, Ward 5(3)(1) in held as under: - “16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee’s application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.
17. In the result, the appeal is allowed.”
7. Further, the assessee has placed reliance on the decision of Co-ordinate Bench of this Tribunal in in the case of Bhaskar Dutta vs DCIT, the relevant contents are reproduced as under: - “13. Even, otherwise also, the assessee has a strong case on merit as well. In case of M/s.Brinda Ramakrishnan vs. ITO, supra, the Tribunal while dealing with an identical issue has held as under: “16. I have given a careful consideration to the rival submission. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide the disallowance of FTC in case of delay in filing Form No. 67; (ii) filing of Form No. 67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s. 154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s. 154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s. 154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee’s application u/s. 154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned Departmental Representative in this regard.”
14. Further, in case of Sonakshi Sinha Vs. CIT (supra), the coordinate Bench while seized of an identical issue, held as under: “010. We have also put before the learned authorised representative decision of the honourable Supreme Court in civil appeal number 1449 of 2022 in case of PCIT versus Wipro Ltd dated 11 July 2022 as to why the condition of filing form number 67 on or before the due date of filing of the return of income should not be considered as mandatory in nature.
11. The learned authorised representative submitted that honourable Supreme Court was seized of the matter where in the same subsection twin conditions were mentioned, the honourable High Court and lower appellate authorities considered, one of the condition as mandatory and one of the condition as directory. He submitted that here section 90 or 91 does not lay down any condition of filing any form. The requirement of filing of the form is provided under rule 128 of The Income Tax Rules. Therefore, here, the situation is quite different. He submitted that these conditions have been considered by the coordinate bench in case of Brinda Ramakrishna.
We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income 012. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income Tax Rules 1962 provides that the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore - Trib.) wherein following its earlier order in the case of Ms. Brinda Rama Krishna v.ITO [2022] 135 taxmann.com 358 (Bang - Trib) it was held that "one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi V CIT(A) NFAC 06.09.2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further , the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed.”
The ratio laid down in these decisions, in our view, are not only logical but just interpretation of the statutory provisions keeping in view the provision, contained under Section 90 and 91 of the Act. Though, we are conscious of a contrary view taken by the Tribunal in the case of Murlikrishnan vs. ACIT (supra), however, we are inclined to agree with the view expressed in the decisions cited by learned counsel appearing for the assessee.
In view of the aforesaid, we direct the Assessing Officer to allow foreign tax credit to the assessee. Ground is allowed.” 8. Further, the Co-ordinate Bench of this Tribunal in in the case of Sonakshi Sinha vs CIT(A) also ruled in favour of the assesse by observing as under: - “12. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income Tax Rules 1962 provides that the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore - Trib.) wherein following its earlier order in the case of Ms. Brinda Rama Krishna v.ITO [2022] 135 taxmann.com 358 (Bang - Trib) it was held that "one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.
Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi V CIT(A) NFAC 06.09.2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further , the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed. 013. Other grounds of appeal
are also revolving around the issue of claim of foreign tax credit and therefore those are allowed. 014. Accordingly, appeal of the assessee is allowed.”
9. Similar view has been expressed by the Co-ordinate Bench of this Tribunal in the case of Vinodkumar Lakshmipathi vs CIT(A) (2022) 145 taxmann.com 235) Bangalore, also in favour of the assessee by observing as under: - “4. We have heard the rival submissions and perused the materials available on record. The claim of the assessee has been denied while processing return of the assessee u/s 143(1) of the Income-tax Act,1961 ['the Act' for short] dated 11.6.2020 on the reason that assessee has not filed the Form No.67 along with return of income so as to claim the foreign tax credit. However, the same has been filed before the Ld. CIT(A) on 22.9.2018. The assessee has made the contention before Ld. CIT(A) that assessee has offered the foreign income of Rs.2,01,024/- and also paid tax on it at Rs.63,342/- and levying of additional tax of Rs.28,431/- is amounting to double taxation. In our opinion, the plea of the assessee is justified. The assessee has filed the copy of Form No.67 before Ld. CIT(A). He ought to have given direction to give credit for foreign tax which has been paid as per Form 67.
5. Further, we note that on identical issue, This Tribunal in the case of Brinda Rama Krishna (in for AY.2018-19), order dated 17.11.2021 held that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. The findings of this Tribunal are reproduced below: “2. The Assessee is an individual and during the previous year relevant to AY 2018- 19 an ordinary resident in India. The Assessee worked with Ernst & Young Australia from 20.11.2017 till 16.05.2019. Since her global income was taxable in India, the Assessee offered to tax salary income earned for services rendered in Australia for the period from December 2017 to March 2018 to tax in India. The Assessee claimed foreign tax credit ("FTC") for taxes paid in Australia.
3. There is no dispute that the Assessee is entitled to claim FTC. Rule 128 of the Income Tax Rules, 1962 (Rules) provides for giving FTC and reads thus: ........ ........
The learned DR reiterated the stand of the revenue that rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to give FTC. He also submitted that the issue was debatable and cannot be subject matter of decision in Sec.154 proceedings which are restricted in scope to mistakes apparent on the face of the record.
15. In his rejoinder, the learned counsel for the Assessee submitted that Form No.67 was available before the AO when the intimation u/s.143(1) of the Act dated 28.5.2020 was passed. He pointed out that the AO or the CIT(A) did not Page 12 of 14 dismiss the Assessee application for rectification u/s.154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No.67 before the due date u/s.139(1) of the Act was fatal to the claim for FTC.
16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee’s application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.
In the result, the appeal is allowed.”
6. In view of the above order of the Tribunal, we direct the AO to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT(A) after due verification.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.”
Further, the Co-ordinate Bench of this Tribunal in the case of Shridhar Madhav Diwan vs DCIT in also decided the issue in favour of the assessee by directing the Assessing Officer to verify the details of the foreign tax paid by the assessee on the earnings at foreign tax source and take a view inconformity with the established law.
Assessee also placed reliance a CBDT Circular No. 333 dated 02nd April, 1982. The circular clarified that where a specific provision is made in the Double Taxation Avoidance Agreement that provisions will prevail over the general provisions contained in the Income-tax Act. In fact that the Double Taxation Avoidance Agreement which have been entered into by the Central Government under section 90 of the Income-tax Act, also provide that the laws in force in either country will continue to govern the assessment and taxation of income in the respective countries except where provisions to the contrary have been made in the agreement.
Page 13 of 14 12. Now coming to the facts of the present case, the set off qua foreign tax credit has been declined on the ground that the assessee failed to furnish the requisite Form No. 67 within the time limit. However, undisputedly, the Double Taxation Avoidance Agreement between India and Denmark provides for relief in respect of payment of taxes in one jurisdiction and paid in other jurisdiction as well. In the light of the above binding precedents and the CBDT Circular, we are of the considered view that the Assessing Officer ought to have verified the correct position whether the assessee had claimed such benefit at source country i.e. Denmark but no exercise has been carried out by the lower authorities. The claim of the assessee is declined purely on the ground that Form No. 67 was filed belatedly. We, therefore, set aside the orders of the lower authorities and restore the issue to the file of the Assessing Officer with the direction that he would verify whether the assessee has paid taxes in Denmark and also offered same income for taxation in India but no credit was claimed at Denmark. If, he finds that no such relief has been claimed at Denmark, he would decide the issue in the light of the aforesaid decisions and the Circular of CBDT (supra). All the grounds raised in this appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 24/02/2025.