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Facts
The assessee, an individual, filed his return of income for AY 2020-21 declaring taxable income and claiming Foreign Tax Credit (FTC) for tax paid in the UK. The CPC disallowed the FTC due to non-filing of Form 67 along with the ROI.
Held
The Tribunal held that the condition of filing Form 67 along with the ROI is directory in nature. Since the assessee filed Form 67 belatedly and the High Court has also held similarly, the FTC claim should be allowed.
Key Issues
Whether the Foreign Tax Credit (FTC) can be disallowed solely on the ground of belated filing of Form 67?
Sections Cited
Sec. 139(1), Sec. 154, Rule 128(9)
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 03.07.2025 for the Assessment Year (hereinafter referred to as "AY”) 2020-21.
The only grievance of the assessee is against the action of the Ld.CIT(A) denying the Foreign Tax Credit (FTC) as claimed by the assessee.
The brief facts are that the assessee, an individual, filed his return of income (RoI) for the AY 2020-21 on 30.10.2020 u/s.139(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘), declaring taxable income of ₹40,08,736/-. During the year, the assessee has shown to have earned ₹21,42,168/- as salary during his stay in United Kingdom (UK); and since the income relating to UK employment period was taxable in UK also, the assessee claimed to have remitted tax at UK for the salary earned in UK. Accordingly, while filing his RoI in India, the assessee had claimed Foreign Tax Credit (FTC) of ₹4,08,792/-, However, the CPC disallowed the FTC due to non-filing of Form 67 along with the RoI.
Pursuant to it, the assessee filed Form 67 online on 18.03.2022 and filed rectification application u/s.154 of the Act. The AO/CPC, inter-alia, didn’t allow the claim/FTC. Aggrieved, the assessee filed appeal before the Ld.CIT(A), who confirmed the action of the AO.
Aggrieved the assessee is before us.
We have heard both the parties and perused the records. It is noted that the assessee filed ITR u/s.139(1) of the Act for AY 2020-21 on 30.10.2020 declaring income of ₹40,08,736/- and claimed FTC of (AY 2020-21) Govindarajan Vasudevan :: 3 ::
₹4,08,792/- which was remitted/withheld by the foreign employer in UK.
The CPC while passing the intimation u/s.143(1) of the Act dated 24.12.2021, disallowed the FTC since assessee didn’t file Form 67 along with ITR/RoI u/s.139(1) of the Act. In this regard, it is noted that the assessee while filing ITR inadvertently omitted to file Form 67 as required under Rule 128(9) of the Income Tax Rules, 1962 on or before the due date of ITR u/s.139(1) of the Act. However, it is not disputed that the assessee had belatedly filed Form 67 online on 18.03.2022 and brought to the notice of the AO albeit u/s.154 of the Act that it has filed Form 67 on 18.03.2022. However, the AO passed rectification order on 24.01.2023 denying the claim only on the ground that the assessee didn’t file Form 67 before the due date of filing of the ITR u/s.139(1) of the Act, which has been confirmed by the Ld.CIT(A).
We don’t countenance such an action of the Ld.CIT(A)/AO and note the issue is no longer res-integra. According to us, the condition prescribed for filing Form 67 along with RoI u/s.139(1) is directory in nature, and since, the assessee has filed the same before the AO albeit u/s.154 of the Act, the FTC claim ought to have been allowed as held by the Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy (WP No.5834 of 2022 & ors. order dated 06.10.2023), wherein it was held by their Lordship that filing of this Form in terms of Rule 128 was only directory in nature. And further observed that the Rule is only for the (AY 2020-21) Govindarajan Vasudevan implementation of the provisions of the Act and it would always be directory in nature. Respectfully following the same, we direct Ld. CIT(A) to grant impugned Foreign Tax Credit to the assessee after verifying Form No.67.
In the result, appeal filed by the assessee is allowed.