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Facts
The assessee, a non-resident individual from the USA, filed her income tax return for AY 2023-24, claiming benefits under the India-USA DTAA. The CPC denied these benefits due to the late filing of Form 10F and Tax Residency Certificate (TRC). The CIT(A) allowed the assessee's appeal, directing the AO to grant relief after verification.
Held
The Tribunal held that filing Form 10F is a directory procedural requirement, not a condition precedent for DTAA benefits, and any delay is curable. The substantive right to DTAA benefits, once established, cannot be denied for delayed procedural compliance, especially when the form is eventually filed.
Key Issues
Whether the denial of DTAA benefits due to delayed filing of Form 10F and TRC was justified, and if such a procedural lapse invalidates the substantive treaty benefit.
Sections Cited
90, 90(4), 90(5), 139(1), 143(1)
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Income Tax Appellate Tribunal, Hyderabad B Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by the Revenue feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), Hyderabad-10 (“Ld. CIT(A)”) dated 25.03.2025 for the Assessment Year (“A.Y.”) 2023-24. 2. The Revenue has raised the following Grounds of appeal:
1. The CIT(Appeals) erred both in law and on facts of the case in granting relief to the assessee.
1.
On the facts and in the circumstances of the case, and in law, whether the CIT(Appeals) is justified in holding that the assessee is eligible for computation of tax at special rates as per the Double Taxation Avoidance Agreement (DTAA) with USA without appreciating the fact that the assessee failed to submit/provide the requisite Tax Residency Certificate as provided u/s.90(4) and Form 10F as provided u/s.90(5) of the Income Tax Act, 1961 on or before the filing of return of income for A.Y.2023-24, wherein the relief under DTAA is claimed?
DCIT (International Taxation) Vs. Thogarchedu Subha Sri 3. On the facts and in the circumstances of the case, and in law, whether the CIT(Appeals) is justified in granting relief to the assessee by considering the Tax Residency Certificate and Form 10F filed much later after filing the return of income, when Sec.90(4) of the Income Tax Act, 1961 clearly states that the assessee 'shall not be entitled to claim any relief under such agreement' unless the Tax Residency Certificate and Form 10F furnished? 4. Any other ground of appeal that may be raised with the prior approval of the Hon'ble ITAT during the appellate proceedings.”
The brief facts of the case are that the assessee is a non-resident individual, being a tax resident of the United States of America (“USA”), who filed her return of income for the Assessment Year 2023-24 on 31.07.2023, declaring a total income of Rs.9,88,95,660/-. The assessee computed tax on the said total income by applying the applicable rates in accordance with the provisions of the Income-tax Act, 1961 (“the Act”) read with the provisions of the India–USA Double Taxation Avoidance Agreement (“DTAA”). While computing the tax liability, the assessee applied the beneficial rates under the DTAA as under:
(a) Tax computed at Rs. 4,24,160/- on dividend income of Rs.21,20,798/- at the rate of 20% under section 115A(1)(a)(i) of the Act; (b) Tax computed at Rs. 4,65,400/- on interest income from NRO bank accounts of Rs.31,02,665/- at the rate of 15% as per Article 11 of the India–USA DTAA; (c) Tax computed at Rs. 1,40,50,830/- on interest income from loans of Rs.9,36,72,197/- at the rate of 15% as per Article 11 of the DTAA.
3.1 Accordingly, the assessee computed total tax liability at Rs.2,15,87,403/- including the amount of surcharge & education cess on the returned income and paid the entire tax before filing the return of income. The return of income of the assessee was subsequently processed by the Centralised Processing Centre (“CPC”) under section 143(1) of the Act vide intimation dated 05.07.2024. While processing the return, the CPC denied the benefit of DTAA rates and computed tax on the total income as per the normal provisions of the Act, on the ground that the assessee had not filed Form No.10F in accordance Page 2 of 10 3.2 In response to the said intimation under section 143(1) of the Act, the assessee filed a rectification application under section 154 of the Act, which was rejected by CPC vide order dated 01.08.2024. Thereafter, the assessee filed another rectification application on 29.08.2024 with the CPC, along with Form No.10F and the Tax Residency Certificate (“TRC”). The second rectification application was also rejected by CPC vide order dated 24.12.2024.
Aggrieved with the order of the CPC, the assessee preferred an appeal before the Ld. CIT(A). After considering the submissions of the assessee, the Ld. CIT(A) allowed the appeal and directed the Ld. AO to grant relief to the assessee after verification of Form No.10F and the TRC and recompute the tax liability accordingly after providing an opportunity of being heard to the assessee.
Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. At the outset, the Learned Departmental Representative (Ld. DR”) submitted that the solitary issue arising from the grounds of appeal
of the Revenue is with regard to the relief granted by the Ld. CIT(A) despite the fact that the assessee failed to file Form No.10F within the due date prescribed under section 139(1) of the Act. The Ld. DR submitted that the due date for filing the return of income in the case of the assessee was 31.07.2023, whereas Form No.10F was filed by the assessee electronically only on 26.08.2024, much after the due date. It was contended that filing of Form No.10F is a mandatory pre- condition for availing DTAA benefits under section 90 of the Act and non- compliance thereof disentitles the assessee from claiming such benefit. In support of this contention, reliance was placed on the decision of the Hon’ble Supreme Court in the case of PCIT Vs. Wipro Ltd. (446 ITR 1), wherein it was held that compliance with statutory conditions within the prescribed time limit is mandatory and not directory, and failure to comply results in denial of the benefit Page 3 of 10. DCIT (International Taxation) Vs. Thogarchedu Subha Sri claimed. It was argued that the same principle applies to filing of Form No.10F. The Ld. DR further relied on the decision of the Visakhapatnam Bench of the Tribunal in the case of Muralikrishna Vaddi Vs. ACIT/DCIT (ITA No.269/Viz/2021 dated 14.06.2022), wherein foreign tax credit was denied due to delayed filing of Form No.67 beyond the due date under section 139(1) of the Act. It was further contended that rectification under section 154 of the Act was not permissible in the present case, as there was no mistake apparent from the record, since Form No.10F was admittedly not available before CPC at the time of processing the return. In this regard, reliance was placed on the decision of the Hon’ble Supreme Court in the case of CIT v. Reliance Telecom Ltd. (440 ITR 1). The Ld. DR also invited our attention to para no. 6.2 of the order of the Ld. CIT(A) and submitted that the Ld. CIT(A) failed to record any specific finding on the delay in filing Form No.10F, and without adjudicating this crucial issue, allowed the appeal of the assessee. Accordingly, it was prayed that the order of the Ld. CIT(A) be set aside.
6. Per contra, the (“Ld. AR”) submitted that the assessee is an undisputed non-resident individual and tax resident of the USA, which is clearly reflected in the return of income filed in ITR-2 and is also acknowledged by CPC itself in the intimation issued under section 143(1) of the Act. The Ld. AR invited our attention to the return of income placed at page no. 78 of the paper book, wherein the residential status of the assessee has been clearly mentioned. Attention was also drawn to page no. 1 of the CPC intimation place at page no. 65 of the paper book, wherein the assessee has been treated as a non-resident. Thus, there is no dispute regarding the residential status of the assessee. The Ld. AR further submitted that the assessee computed tax strictly in accordance with the India–USA DTAA, paid the entire tax before filing the return, and there is no dispute regarding the nature of income, quantum of income, or applicability of DTAA rates. It was submitted that section 90 of the Act read with Rule 21AB of the Income-tax Rules, 1962 ( “the Rules”) does not prescribe any time limit for filing Form No.10F. The requirement is only that Form No.10F should be Page 4 of 10 DCIT (International Taxation) Vs. Thogarchedu Subha Sri furnished to claim DTAA benefits. In the absence of any statutory time limit, delayed filing of Form No.10F cannot result in denial of substantive treaty benefits. The Ld. AR also submitted that Form No.10F along with the TRC was ultimately furnished before CPC along with the rectification application and therefore the assessee had fully complied with the statutory requirement. Reliance was placed on the decision of the Bangalore Bench of the Tribunal in the case of Deepak Shimoga Padmaraju Vs. ADIT/ITO (ITA No.239/Bang/2024 dated 17.04.2024), wherein it has been held that non furnishing of Form no. 67 before the due date under section 139(1) of the Act is fatal to claim for foreign tax credit. Accordingly, it was submitted that the Ld. CIT(A) has rightly allowed the appeal and the same deserves to be upheld.
We have carefully considered the rival submissions, perused the material available on record, and examined the statutory provisions and judicial precedents relied upon by both the parties. At the outset, we note that the CPC has denied the DTAA benefit while processing the return of the assessee under section 143(1) of the Act solely on account of non-filing of Form No.10F within the specified date under section 139(1) of the Act along with the return of income. In this regard, we have gone through the provisions contained under section 90 of the Act, which is to the following effect:
“Agreement with foreign countries or specified territories. 7490. (1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,— (a) for the granting of relief in respect of— (i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or (ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, 75 [without creating opportunities for non-taxation or Page 5 of 10 DCIT (International Taxation) Vs. Thogarchedu Subha Sri reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in the said agreement for the indirect benefit to residents of any other country or territory),] or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be, or investigation of cases of such evasion or avoidance, or (d) for recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the case may be, and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement. (2) Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee. (2A) Notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A of the Act shall apply to the assessee even if such provisions are not beneficial to him. (3) Any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf. (4) An assessee, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate76 of his being a resident in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory. (5) The assessee referred to in sub-section (4) shall also provide such other documents and information, as may be prescribed77. Explanation 1.—For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company.
Page 6 of 10 DCIT (International Taxation) Vs. Thogarchedu Subha Sri Explanation 2.—For the purposes of this section, "specified territory" means any area outside India which may be notified as such by the Central Government. Explanation 3.—For the removal of doubts, it is hereby declared that where any term is used in any agreement entered into under sub-section (1) and not defined under the said agreement or the Act, but is assigned a meaning to it in the notification issued under sub-section (3) and the notification issued thereunder being in force, then, the meaning assigned to such term shall be deemed to have effect from the date on which the said agreement came into force. Explanation 4.—For the removal of doubts, it is hereby declared that where any term used in an agreement entered into under sub-section (1) is defined under the said agreement, the said term shall have the same meaning as assigned to it in the agreement; and where the term is not defined in the said agreement, but defined in the Act, it shall have the same meaning as assigned to it in the Act and explanation, if any, given to it by the Central Government.”
On a careful perusal of above, we find that Section 90(2) of the Act confers a substantive statutory right upon an assessee to be governed by the provisions of the DTAA to the extent they are more beneficial than the provisions of the Act. Section 90(4) and Section 90(5) of the Act requires the assessee to furnish TRC and certain prescribed documents and informations. We have also gone through Rule 21AB of the Rules, which is to the following effect:
“Certificate for claiming relief under an agreement referred to in sections 90 and 90A. 21AB. (1) Subject to the provisions of sub-rule (2), for the purposes of sub-section (5) of section 90 and sub-section (5) of section 90A, the following information shall be provided by an assessee in Form No. 10F, namely:— (i) Status (individual, company, firm, etc.) of the assessee; (ii) Nationality (in case of an individual) or country or specified territory of incorporation or registration (in case of others); (iii) Assessee's tax identification number in the country or specified territory of residence and in case there is no such number, then, a unique number on the basis of which the person is identified by the Government of the country or the specified territory of which the assessee claims to be a resident;
Page 7 of 10 DCIT (International Taxation) Vs. Thogarchedu Subha Sri (iv) Period for which the residential status, as mentioned in the certificate referred to in sub-section (4) of section 90 or sub- section (4) of section 90A, is applicable; and (v) Address of the assessee in the country or specified territory outside India, during the period for which the certificate, as mentioned in (iv) above, is applicable. (2) The assessee may not be required to provide the information or any part thereof referred to in sub-rule (1) if the information or the part thereof, as the case may be, is contained in the certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A. (2A) The assessee shall keep and maintain such documents as are necessary to substantiate the information provided under sub-rule (1) and an income-tax authority may require the assessee to provide the said documents in relation to a claim by the said assessee of any relief under an agreement referred to in sub-section (1) of section 90 or sub- section (1) of section 90A, as the case may be. (3) An assessee, being a resident in India, shall, for obtaining a certificate of residence for the purposes of an agreement referred to in section 90 and section 90A, make an application in Form No. 10FA to the Assessing Officer. (4) The Assessing Officer on receipt of an application referred to in sub- rule (3) and being satisfied in this behalf, shall issue a certificate of residence in respect of the assessee in Form No. 10FB.”
On perusal of above, we find that Rule 21AB mandates furnishing of prescribed informations in Form No.10F. Further a combined perusal of section 90 of the Act and Rule 21AB of the Rules, it is evident that no time limit has been prescribed either under the Act or the Rules for filing the said form. Further, it is evident that Form 10F does not create the right to claim DTAA benefit; it only facilitates verification of information. The right flows from the DTAA read with section 90(2) of the Act. Once tax residency and treaty entitlement are established, Form 10F remains a procedural compliance. Hence, we find considerable force in the contention of the Ld. DR that neither the Act nor the Rules prescribe any time limit for filing Form 10F. Unlike certain provisions where the legislature has expressly mandated filing of a report or form within a specified time, no such embargo is attached to Form 10F. Therefore, in our considered view, in absence of any statutory prescription, the filing of Form 10F
Page 8 of 10 DCIT (International Taxation) Vs. Thogarchedu Subha Sri cannot be treated as a condition precedent, non-fulfilment of which would automatically result in denial of treaty benefit. At best, it is a directory procedural requirement, non-compliance of which is curable. It is a settled principle of law that procedural requirements are handmaids of justice and cannot be allowed to frustrate substantive rights, particularly when the assessee is otherwise eligible for the benefit claimed. Courts and tribunals have consistently held that procedural lapses, omissions, or delays, unless expressly made fatal by statute, cannot override substantive entitlements. Applying this well-established principle, we hold that delay in filing Form 10F is a curable procedural defect, and once the form is furnished, the same relates back to the claim of DTAA benefit made in the return of income.
The reliance placed by the Revenue on the decision of the Hon’ble Supreme Court in Wipro Ltd.(supra) is clearly distinguishable. In that case, the issue was related to section 10B(8) of the Act, which contains an explicit statutory requirement that the declaration must be furnished within the due date prescribed under section 139(1) of the Act. However, in the present case, no such requirement exists in section 90 of the Act. Similarly, the decision in Muralikrishna Vaddi(supra) is also distinguishable, as it relates to Form No.67, which expressly mandates the filing of the Form no. 67 within the due date under section 139(1) of the Act. However, no such mandate exists for Form No.10F. Further, as regards the objection of the Revenue relating to rectification under section 154 of the Act, we find that the denial of DTAA benefit was purely mechanical due to non-availability of Form No.10F at the relevant time. Once the assessee furnished Form No.10F and the TRC, the issue became non- debatable and capable of verification. Therefore, the reliance placed by the Revenue on Reliance Telecom Ltd.(supra) is also misplaced.
In the above facts and circumstances of the case, we hold that the procedural requirements, in the absence of statutory time limits, are directory in nature, and substantive benefits flowing from a tax treaty cannot be denied
Page 9 of 10 DCIT (International Taxation) Vs. Thogarchedu Subha Sri merely on account of delayed compliance with procedural formalities, particularly when the assessee is otherwise eligible in substance. Accordingly, we find no infirmity in the order of the Ld. CIT(A). The grounds raised by the Revenue are dismissed, and the order of the Ld. CIT(A) is upheld.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 11th February, 2026.
Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, dated 11th February, 2026 Okk, Sr. PS Copy to: S.No Addresses 1 Thogarchedu Subha Sri, Plot No.31, Road No.76, Shaikpet, Hyderabad, Telangana-500033. 2 (i) DCIT (International Taxation)-2, Hyderabad. (ii) Deputy Commissioner of Income Tax, R.No.506, 5th Floor, Aayakar Bhawan, Basheerbagh, Hyderabad, Telangana-500004. 3 Pr. CIT, Hyderabad. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Digitally signed KAMALA by KAMALA KUMAR KUMAR ORUGANTI ORUGANTI Date: 2026.02.12 14:59:12 +05'30'
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