SUVODEEP PYNE,GARIA vs. ITO, WARD 63(1), KOLKATA

4. Aggrieved and dissatisfied, the assessee has come in appeal before us. The ld. AR challenged the very impugned order by submitting that the assessee during the assessment year 2018-19 received salary from USA as he was an employee of Linkedin, his global income was taxable in India. The ld. AR submits that the assessee filed ITR on 29.08.2018 along with Form No.67 to support the claim of foreign tax credit (‘FTC’) but however inadvertently Form No.67 was filed mentioning nil amount under column of total FTC claim. The ld. AR further submits that 2 &2252/Kol/2025 Suvodeep Pyne realising the mistake, the assessee filed rectification application u/s 154 on 19.03.2020 and rectification order was passed denying the claim of FTC and further the assessee on the advice of consultant filed revised Form No.67 on 27.12.2023 and also put this matter before the grievance portal but no result has been found. In support of this argument, the ld. AR relied upon the following case laws: i. in the case of Surendra Kumar Goenka. in the case of Suchi Agrawal vs. ITO ii. Deepak Shimoga Padmaraju vs. ACIT [2024] 162 taxmann.com 96 (Bangalore-Trib.) iii. Isha Mago vs. ACIT in 4.1 The ld. AR further submits that filing of Form No.67 is directory and not mandatory. The prayer of the ld. AR is that the assessee is entitled to claim of FTC of the relevant period of the assessment year.

5. Contrary to that, the ld. DR supports the impugned order.

6. After hearing the submissions of the counsels of the respective parties and particularly on perusal of the impugned order, the following facts have been emerged:

&2252/Kol/2025 Suvodeep Pyne 2. He filed his India Tax Return (ITR 2) on 29/08/2018 which is within due date (Extended Due date) i.e 31/08/2018. He also filed Form 67 on 29/08/2018 to support his claim of Foreign Tax Credit in ITR 2. Form 67 was filed well within due date as prescribed under Rule 128 (9). In this Case due date was 31/08/2018.

3. However, inadvertently Form 67 was filed mentioning Nil Amount under Column of "Total Foreign Tax Credit claimed.

4. On 14/03/2020, CPC processed my ITR 2 & Form 67 as filed by issuing intimation u/s 143 (1) CPC disallowed claim of Foreign tax Credit of INR 14,26,920 in view of Nil Tax Credit claimed in Form 67.

5. Considering the fact that there is apparent mistake in Form 67, as advised by my consultant, I filed Rectification application u/s 154 on 19/03/2020. However, rectification order was issued on 24/06/2020 denying the claim of Foreign Tax credit of INR 14,26,920.

6. Meanwhile, on 5th March 2020, he moved to USA for employment purpose and thereafter he was neither aware of further steps nor his consultant advised him for next course of action.

7. In F.Y 2023-24, assessee’s consultant realised a mistake of filing incorrect Form 67 done by the assessee and the consultant accordingly filed Revised Form 67 on 27/12/2023.

8. Then thereafter, as advised by his consultant, he raised grievance on Income Tax Portal on 29/12/2023.

6.1 We have gone through the order passed by the JCIT and found that the JCIT had dismissed the appeal of the assessee by observing as under: 4 &2252/Kol/2025 Suvodeep Pyne “7.8 In this present appeal, as the appellant had not claimed the relief for Foreign Tax Credit of Rs. 14,26,920/- in Form No.67 filed on 29.08.2018, along with the Original Return of Income filed on 29.08.2018 u/s 139(1), but he has claimed the same in the corrected Form No.67 very belatedly on 27.12.2023, with a delay of more than 5 years and 3 months, beyond the extended due date of 31.08.2018 for the A.Y. 2018-19, he has not satisfied the mandatory twin condition of (i) claiming the relief in the return of income filed on or before the due date specified u/s 139(1), and (ii) furnishing the requisite Form.No.67 on or before the specified due date for furnishing of return of income u/s 139(1). Moreover, it is also clarified that the power to condone the delay in filing Form No.67 is the I.T. authorities, viz.. CIT(Appeals)/Addl/JCIT(Appeals) / Assessing Officer/CPC, and hence the delay in filing the corrected Form.67, which was filed very belatedly after 5 years, on 27.12.2023, cannot be condoned by JCIT(Appeals). In view of all the above, the grounds of appeal of the appellant is dismissed.” 6.2 Now, going over the cited case laws, we find that in the case of Surendra Kumar Goenka (supra), the Hon’ble Tribunal has held as under:

“8. We find that the assessee has filed its original income tax return on 31.07.2017 u/s 139(1) of the act and Form no. 67 has been filed on 12.07.2018. The Ld. CIT(A) has dismissed the case of the assessee only on this ground that there was a delay in filing of form no.

67. We have perused the decision of Co-ordinate bench of Kolkata in the case of Anindya Sarka vs. ACIT, CPC in for AY 2020-21 dated 26.07.2024. The operative part is reproduced as under: “7. The Ld. DR supported the order of the Ld. CIT(A). We have gone through the rival contention and also examined the facts. It was submitted before the Ld. CIT(A) by the assessee that the rerun of income was filed on 25.12.2020 and on 26.12.2020 he had submitted the Form No. 67 after receiving the communication from the e-filing team, Income Tax Department on 25.12.2020 that the return of income was not accompanied by Form No. 67 as mandated by law. Subsequently, since the credit was not allowed, he filed rectification application and Form No. 67 on 03.07.2022 and prior to that rectification requests on 21.05.2022 and on 07.06.2022 were also filed. The credit was not allowed since From No. 67 was filed beyond the date for filing the return of income under Section 139(1) of the Act. In the case of Mahua Bagchi Vs. ACIT (supra) relied upon by the assessee, it is held as under: “5. After hearing rival contentions and perusing the material on record, we find that the assessee served abroad and some foreign tax to the tune of Rs. 17,72,470/- was deducted in United Kingdom under DTAA between India and UK and provision of Section 90(2) of Suvodeep Pyne the Act. We also note that Rule 128 sub-Rule 9 provides that Form- 67 should be filed on or before the due date of filing the return of income. However, we note that nowhere it is stated that in case of delayed filing of Form-67 by way of foreign tax credit which is deducted from the assessee in foreign country i.e U.K. would be denied. Accordingly, we are of the considered view that the assessee is entitled to get this foreign tax credit of Rs. 17,72,470/- u/s 90 of the Act. We also note that the claim in respect of foreign tax was allowed in the order passed u/s 143(1) of the dated 28.03.2019 and was withdrawn by the AO by passing order u/s 154 of the Act when the assessee filed form 67 before the AO. In our opinion the credit in respect of foreign tax cannot be denied to the assessee for the technicality of not filing the form 67 within the due date of return u/s 139(1) of the Act. The case of the assessee finds support from the decision of Coordinate Benches in the case of Atanu Mukherjee Vs. ITO in for AY 2020-21 order dated 20.12.2022 and Sobhan Lal Gangopadhyay Vs. ADIT in for AY 2020-21 order dated 09.05.2023.

8. Further, in the case of Deepak Shimoga Padmaraju Vs. Assistant Director of Income Tax (supra), relying upon the case of Brinda Rama Krishna in for AY 201819, order dated 17.11.2021 it has been held that Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.

6. On appeal by the Assessee, the CIT(A) vide Order dated 03.09.2021 confirmed the Order of AO. The CIT(A) held that the Assessee has not filed Form 67 before the time allowed under section 139(5) of the Act, and therefore Form 67 is non-est in law. The CIT(A) also held that provisions of Rule 128 are mandatory in nature. The CIT(A)rejected the contention of the Assessee that filing of Form 67 is a procedural requirement and noncompliance thereof does not disentitle the Assessee of the FTC.

9. Further, similar issue arose in the case of Sukhdev Sen Vs. ACIT, Circle -1, Kolkata (ITA No. 78/Kol/2014, dated 26.03.2024). The relevant extract of the aforesaid order is as under: “7. Before proceeding further, we would like to reproduce rule 128 of the Income-tax Rules, 1962 (the Rules) which relates with foreign tax credit as under: "Foreign Tax Credit. 128 (1) An assessee, being a resident shall be allowed credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such lax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India" Suvodeep Pyne 8. We further note that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. Article 25 of DTAA between India and USA provides for credit for foreign taxes. Article 25(2)(a) is relevant in the present context. Same is extracted below: "Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the United States, whether directly or by deduction. Such deduction shall not, however, exceed that part of the incometax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States"

9. Thus, Section 90 of the Act read with Article 25(2)(a) of the DTAA provides that tax paid in USA shall be allowed as a credit against the tax payable in India but limited to the proportion of Indian tax Neither section 90 nor the DTAA provides that FTC shall be disallowed for non- compliance with any procedural requirement. Foreign Tax Credit is an assesser's vested right as per Article 25[2](a) of the DNA road wat Section 90 and same cannot be disallowed for noncompliance with procedural requirement that is prescribed in the rules.

10. Further, we would like to mention that rule 128(9) provides that Form No. 67 should be filed on or before the due date of filing the return of income as prescribed u/s 139(1) of the Act. However, the rule nowhere provides that if the said Form No. 67 is not filed within the required time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. It is therefore evident that if the intention of the legislature were to deny the foreign tax credit, either the Act or the rules would have specifically provided that the foreign tax credit would be disallowed if the assessee does not file Form No. 67 within the due date prescribed under section 139(1) of the Act. We further note that Filing of Form No. 67 is a procedural/directory requirement and is not a mandatory requirement and violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. In support of the claim, the assessee has relied upon several decisions including the following decision: i. . CIT vs. G.M. Knitting Industries (P) Ltd. 71 Taxmann.com 35(SC) ii) Brinda Ramakrishna vs. IPO 193 ITD 840 (Bang) iii) 42 Hertz Software India Pvt. Ltd vs Asst. CIT. Ita No.

12. Further, in the case of Engineering Analysis Centre of Excellence Private Limited vs the Commissioner of Income-tax & Anr. Civil Appeal Nos. 8733-8734 of 2018 & Ors. Hon'ble Supreme Court have held as under that the provisions of DIAA shall override the provisions of the Income-tax Act unless they are more beneficial to the assessee: 165. The conclusions in the aforestated paragraph have no direct relevance to the facts at hand as the effect of section 902) of the Income Tax Act wat explanation 4 thereof, is to treat the DTAA provisions as the low that must be followed by Indian courts, notwithstanding what may be contained in the Income Tax Act to the contrary, unless more beneficial to the assessee.

13. We have gone through the decisions of the coordinate Benches and concur with their findings in this regard that filing of Form No. 67 is directory and not mandatory and the credit for foreign taxes paid cannot be denied merely on the delay in filing the Form No.

67. In the case of M/s 42 Hertz Software India Pvt Ltd. Vs the Assistant Commissioner of Income Tax, Circle 3 (1)(1), Bangalore, ITAT. BANGALORE it is held that: 6. There is no dispute that the Assessee is entitled to claim FTU On perusal of provisions of Rule 128 (8) & (9), it is clear that, one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, 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 This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms. Brindu Kumar Krishna us. ITO in Bang/2021 by order dated 17/11/2021.

7. It's a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence (P) Ltd reported im (2021) 432 ITR 471.

9. In the result, the appeal filed by the assessee is allowed.

14. In the result, appeal of the assessee is allowed.”

16. We have also gone through the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy us. PCIT (supra) and found that the facts are identical to the facts of the case of the assessee and the decision is squarely applicable to the facts of the case of the assessee. In that case, the petitioner was resident of India and had filed Indian ITR and claimed benefit of FTC u/s 90/91 of the Act row. Article 24 of the India-Kenya DTAA. During the year, he had income of both Kenya and India but while filing the Indian ITR for the impugned assessment year 2019-20, the Form No. 67 prescribed in rule 128 of the rules for claiming FTC was inadvertently not uploaded along with the ITK which was uploaded on 02.02.2021 The return was processed on 26.03.2021, however, the credit of FTC was not given effect to and the request made to the CPC to give effect to the FTC was not accepted and intimation along with notices of demand was received. The assessee also could not succeed with the rectification application filed and approached the CIT u/s 264 of the Act and at the same time filed a writ petition before the Hon'ble Madras High Court. It was stated by the respondent- department that rule 128 is mandatory and cannot be considered as directory in nature. The petitioner referred to the judgment of the Hon'ble Supreme Court in the case of CIT vs. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015 The Hon'ble High Court allowed the Writ Petition in favour of the assessee by holding as under. “11. The law laid down by the Hon'ble Apex Court in Commissioner of Income Tax, Maharashtra v. G.M.Knitting Industries (P) Limited in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FTC, however the same was filed before passing of the final assessment order. The filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature This is what the Hon'ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order. W P. No 5834 of 2022. 12 Further, in the present case, the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the PTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside. Suvodeep Pyne 13. Accordingly the impugned order dated 25.01.2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set wade only to the extent of disallowing of FTC clam made by the petitioner und hence, the first respondent is directed to consider only on the aspect of rejection of FTC clam within a period of 8 weeks from the date of receipt of copy of this order"

9. The relevant extracts of Article 23(4) of the Treaty on Relief From Double Taxation is reproduced below for ready reference: “ In India , double taxation shall be eliminated as follows: Where a resident of India derives income or owns a capital which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the Netherlands, whether directly or by deduction, and as a deduction form the tax on the capital of that resident, an amount equal to the capital tax paid in the Netherlands. Such deduction in either case shall not, however, exceed that part of the income tax or capital tax (as computed before the deduction is given ) which is attributable, as the case may be, to the income or the capital by which may be taxed in the Netherlands. Further, where such resident is a company by which sur tax is payable in India, the deduction in respect of income tax paid in the Netherlands shall be allowed in the first instance from income tax payable by the company in India and as to the balance, if any, from sur tax payable by it in India.”

Kolkata, the 21st January, 2026.