Kunal Ramesh Shah, Mumbai vs ADIT | ITAT Mumbai 2024

Income Tax Appellate Tribunal, “J” BENCH, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI RAJ KUMAR CHAUHAN, HON’BLE

For Appellant: Shri Ravi Dasija, C.A. & Kiran Mehta, C.A., A/Rs

Hearing: 24/07/2024Pronounced: 24/07/2024

PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order of the NFAC, Delhi, dt. 29/03/2024, pertaining to AY 2020-21. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A), erred in not holding that the assessee was entitled to Foreign Tax Credit (FTC) of Rs. 4,21,428/- merely on the ground that Form 67 was not filed along with the return of income.

Briefly stated the facts of the case are that the assessee is a salaried person and was employed with M/s. Larsen & Toubro Infotech Limited. The assessee was sent abroad and posted in U.S.A., for service by his employer where the assessee received salary and paid taxes for which Form 67 was filed. The claim of the assessee was denied by the 2

CPC, for the simple reason that Form 67, was not filed along with the return of income.

Representatives of both the sides heard at length. There is no dispute that the assessee holds a foreign tax credit certificate for Rs.4,21,428/-. In our considered opinion filing of Form 67 is procedural/directory requirement and is not mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantial right of claiming the credit of FTC. We accordingly direct the AO to allow the credit of FTC and hold that Rule 128(9) of the Income Tax Rules, 1962 (Rules) does not provide for disallowance of FTC in the case of delay in filing of Form 67 as the same is not mandatory but a directory requirement and DTAA over-rides the provision of the Act and the Rules.

The Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT in W.P. No. 5834 of 2022 vide order dt. 06/10/2023, has held in para 11 to 13 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.

KUNAL RAMESH SHAH ,MUMBAI vs. ADIT CPC BANGALURU , BANGALURU