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Facts
The assessee filed its return of income for AY 2020-21 claiming Foreign Tax Credit (FTC) of Rs. 16,74,950/-, but Form 67, required for the claim, was filed after the extended due date for filing the return. Consequently, the CPC denied the FTC and raised a demand, which was upheld by the CIT(A) after rejecting the assessee's rectification request under Section 154.
Held
The Income Tax Appellate Tribunal found the facts of the case to be identical to a prior ruling (Vaibhav Singhal vs. ITO). Following the precedent, the Tribunal remitted the issue back to the Assessing Officer (AO) with directions to consider the assessee's claim for Foreign Tax Credit based on the documents already submitted and decide it as per law.
Key Issues
Whether Foreign Tax Credit can be denied solely on the grounds of delayed filing of Form 67, and if such a denial, arising from an intimation under Section 143(1), can be rectified under Section 154, especially when the assessee contends it is a procedural formality.
Sections Cited
250, 90(2), 143(1), 234A, 234B, 234C, 154, 139(1), Rule 128(9)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Order
: 04.07.2024 ORDER
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the assessee is directed against the order of the ld. CIT (Appeals)/National Faceless Appeal Centre (NFAC) dated 28.07.2023 for the assessment year 2020-21.
Grounds of appeal
taken by the assessee read as under :- “1. That the order under section 250 passed by the learned Commissioner of Income Tax (Appeals) is bad in law, wrong in facts against natural justice.
2. That the learned Commissioner of Income Tax (Appeals) has erred by not allowing Foreign Tax Credit despite the fact that tax was paid overseas and Form 67 was filed before the end of the assessment year.”
Brief facts of the case as summarised are that assessee filed return of income on 29.12.2020 declaring taxable of Rs.1,66,74,950/- and claiming refund of Rs. Nil. In this return, the assessee has claimed a foreign tax credit ["FTC"] of Rs.16,74,950/- by filing Form 67 u/s 90(2) of the Income- tax Act, 1961 (for short ‘the Act’), which was filed on 01.03.2021. The return of income was processed u/s 143(1) of the Act on 25.11.2021, wherein the CPC, although accepted the returned income, denied the FTC and raised a demand to the tune of Rs.21,73,460/- (out of which Rs.16,74,950 is on account of denial of tax credit and Rs.5,38,401/- is on account of interest charged u/s 234A, B and C). Assessee requested the rectification of a mistake apparent from record u/s 154 of the Act, and the same was rejected vide order dated 22.08.2022.
Against the above order, assessee filed appeal before the ld. CIT (A). Ld. CIT(A) vide order dated 28/07/2023 rejected the appeal of the assessee and held as under:- "During the appellate proceedings, the appellant filed written submission wherein, the appellant contended that the appellant has filed the Form no. 67 on 01.03.2021. Further, it was stated that the Form no. 67 was never revised and was filed only once on 01.03.2021. The appellant has also relied upon certain judicial decisions in support of the contention that the foreign tax credit ought to be granted to the appellant. I have perused the documents on record and as stated by the appellant, the Form no. 67 has been filed on 01.03.2021. The assessment year under consideration is AY 2020-21 and the extended due date for filing Return of Income is 31.12.2020. As 3 per the provisions of the Act, the appellant is required to file the Form no. 67 within the due date of filing return for claiming foreign tax credit and in the case under consideration, the Form no. 67 was filed only on 01.03.2021, which is beyond the due date of filing return. As the appellant has not filed the Form no. 67 within the due date of filing return, the CPC has rightly not granted the credit for foreign tax credit. The judicial decisions relied upon by the appellant are different and distinguishable as the case of the appellant is with respect to the intimation u/s. 143(1) r. w.s 154 of the Act and the issue is not a scrutiny assessment matter. As per the provisions of section 143(1) and 154, only mistake apparent from record can be taken into consideration herein, without going into the judicial decisions etc. As per the provisions of the Act, the appellant has not filed the Form no. 67 within the prescribed time and hence the AD was right in not granting the credit for foreign tax credit. Therefore, AO's action is upheld. Accordingly, the grounds of appeal
are dismissed.”
4. Against the above order, assessee is in appeal before us.
5. The submissions of the ld. Counsel for the assessee are as under :- (i) Rule 128 (9) does not provide for disallowance of Foreign Tax Credit in case of delay in filing Form
67. (ii) Filing of form 67 is a directory requirement and not a mandatory requirement. (iii) Income Tax Act & DTAA override the rules, and rules cannot be contrary to the act. (iv) FTC cannot be disallowed to the Assessee merely because of the late filing of Form 67, as it is a procedural formality on the Assessee's part. (v) Credit in respect of foreign tax paid cannot be denied to the Assessee for the technicality of not filing Form 67 within the due date of return u/s 139(1) of the Act.
6. Per contra, ld. DR for the Revenue relied upon the orders of the authorities below.
7. We have carefully considered the submissions of both the parties and perused the material available on record. We note that the ITAT, Delhi Bench in ITA No.3585/Del/2023 in the case of Vaibhav Singhal vs. ITO vide order dated 29.05.2024 concluded as under :- “ Upon careful consideration, we find considerable cogency in the submissions of the ld. Counsel for the assessee. Ld. CIT (A) has primarily taken adverse inference on the ground that necessary claim was not pressed before the AO but the claim was very much before the AO. In the interest of justice and exercising our discretion as spelt out by Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT 157 taxmann.com 1 (SC), we admit this claim of the assessee in the light of the submissions above and case laws cited. We remit the issue to the file of AO. AO shall duly consider the claim of the assessee in the light of the documents already submitted and decide as per law on this claim duly admitted.”
We find that facts in the present case are identical to the aforesaid case. Accordingly, we follow the aforesaid order and remit the issue to the file of AO with similar directions. AO shall duly consider the claim of the assessee in the light of the documents already submitted and decide as per law on this claim duly admitted.