SUMEET SUBHASH NARANG ,MUMBAI vs. DCIT, CIRCLE 42(3)(1), MUMBAI

3 ITA No.818/M/2024 Mr. Sumeet Subhash Narang  Order of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The Principal Commissioner of Income Tax [TS-681-HC-2023(MAD)]  Order of the Hon'ble ITAT in the case of Ms. Sonakshi Sinha vs. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [ITA No. 1704/Mum/2022]  Order of the Hon'ble ITAT in the case of Ms. Brinda Ramakrishna vs. The Income Tax Officer, Ward 5(3)(1), Bangalore [ITA No. 454 /Bang/2021]  Order of the Hon'ble ITAT in the case of Vinodkumar Lakshmipathi vs. CIT(A), NFAC [ITA 680/Bang/2022] It is prayed that the action of the Ld. ADDL/JCIT (A) of not following orders of the Hon'ble High Court and Hon'ble ITAT is contrary to the following judicial pronouncements:  Decision of the Hon'ble Supreme Court in the case of Assistant Collector of Central Excise vs. Dunlop India Ltd. [(1985) 154 ITR 172 (SC)]  Decision of the Hon'ble Telangana High Court in the case of Mylan Laboratories Limited v. The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/income-Tax Officer National Faceless Assessment Centre, Income Tax Department, Delhi & Another [TS-46- HC-2022(TEL)]  Order of the Hon'ble ITAT in the case of Northern Coalfields Limited Vs. Assistant Commissioner of Income Tax, Circle 2(1), Jabalpur (I.T.A. No. 18/Jab/2014) It is, therefore, prayed that the Ld. JAO be directed to allow FTC of Rs. 15,33,519. Ground No. 4: Non-grant of FTC is not a permissible adjustment/no adjustment of a debatable issue can be made in the Intimation under Section 143(1) of the Act. On the facts and circumstances of the case and in law, the Ld. ADDL/ICIT(A) ought to have held that the non-grant of FTC of Rs. 15,33,519 is not a permissible adjustment under Section 143(1) of the Act as no such adjustment relating to

4 ITA No.818/M/2024 Mr. Sumeet Subhash Narang debatable issues can be made in the Intimation under Section 143(1) of the Act It is prayed that the order of Ld. ADDL/ JCT(A) is contrary to the following judicial precedents relied upon during the Appellate Proceedings before the Ld. ADDL/ICIT (A) :  Order of the Hon'ble ITAT in the case of City Manager Association vs. DCIT, CPC Bengaluru, (ITA No.1345/Ahd/2019);  Order of Hon'ble ITAT in the case of Paris Elysees India Private Limited vs. Deputy Commissioner of Income Tax, ITA No. 357/JPR/2022  Decision of the Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers (P.) Ltd [2007] 291 ITR 500. It is, therefore, prayed that the Ld. JAO be directed to allow FTC of Rs.15,33,519. Ground No.5: Proceedings under Section 143(1) of the Act are invalid in law On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) ought to have held the entire 143(1) proceedings as invalid in law as the Ld. AO had not followed the provisos to Section 143(1)(a) of the Act of giving opportunity to the Appellant to defend his case. It is prayed that the order of the Ld. ADDL/JCIT(A) is contrary to the following orders of Hon'ble ITAT relied upon during the Appellate Proceedings before the Ld. ADDL/JCTT (A) :  Arham Pumps v. Deputy Commissioner of Income Tax (CPC), Bengaluru (ITA No.206/Ahd/2021)  Ernst & Young Merchant banking Services LLP Vs. ADIT, CPC, [ITA No. 2333/Mum/2022] It is, therefore, prayed that the Ld. JAO be directed to allow FTC of Rs.15,33,519.

5 ITA No.818/M/2024 Mr. Sumeet Subhash Narang Ground No.6: Form 67 along with proof of taxes paid available on records of the Ld. ADDL/ICIT(A) On the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) has erred in mentioning that providing credit of FTC in absence of verification of Form 67 is not logical. It is prayed that verified Form 67 along with proof of taxes paid in the USA were placed on the records of the Ld. ADDL/JCIT(A). Therefore, the Ld. JAO be directed to allow FTC of Rs. 15,33,519. The Appellant craves leave to add, amend, alter, substitute, withdraw all or any of the above Grounds of Appeal anytime either before or during the hearing of the Appeal.” 3. Though, there are six grounds of appeal raised by the appellant as above, the only issue to be decided in this appeal is about the denial of Foreign Tax Credit (FTC) of Rs.15,33,519/- in the intimation issued by the CPC u/s.143(1) of the Act on the ground that ‘Form 67’ in support of claim of FTC was filed beyond the due date of filing of return of income u/s.139(1) of the Act. 4. The facts of the case, in brief, are that the Appellant is a salaried employee and has earned salary income from Steinberg Asset Management LLC from United States of America (USA) (hereinafter referred to as SAML) and Samara India Advisors Private Limited (SIAPL) from India during A.Y. 2020-21. During the assessment year under consideration, the Appellant was a Resident and Ordinarily Resident (ROR) in India as per the provision of the Act. As the

6 ITA No.818/M/2024 Mr. Sumeet Subhash Narang Appellant was ROR in India, the Appellant's global income was taxable in India. Accordingly, salary earned from SAML, USA, being taxable in India, was offered to tax in India. Since the Appellant earned salary income in USA also, the Appellant was required to offer this income for taxation in USA, which the appellant paid in USA. So, according to the appellant, the salary income offered to tax in USA for the period from 1st April 2019 to 31st March 2020 was doubly taxed in India and USA as well. As salary income from SAML was taxed in both India as well as USA, the Appellant was eligible to claim FTC of Rs.15,33,519 for taxes paid in USA as per provisions of section 90 of the Act read with Article 25(2) of the India-USA Double Taxation Avoidance Agreement ('DTAA') read with CBDT Circular No. 333 dated 2nd April 1982. 5. Since the credit of the said FTC was denied by the CPC, Bangalore, the assessee filed appeal before the Ld. CIT(A) who decided the appeal as under:- “4.1. The Appellant is aggrieved by the denial of foreign tax credit of Rs.15,33,519/-, which according to CPC is not available when form 67 has not been filed before the time limit specified u/s.139(1). A notice u/s.250 dated 23/11/2023 was issued to the appellant to establish the fact on filing of form no.67 to claim relief of taxes u/s.90.

7 ITA No.818/M/2024 Mr. Sumeet Subhash Narang In response to the same, the Appellant, vide letter dated 07/12/2023 submitted that the relief u/s.90 cannot be denied for the belated filing of form 67 relying on the various case laws. 4.2. The facts of the case and the compliance to the rules laid down u/s.129(8) of the Income tax Rules, 1962 are carefully considered. It is an admitted fact that Form no.67 has not been filed by the Appellant before the time limit specified u/s.139(1) for A.Y. 2020-21 and such omission is attempted to be justified by the Appellant on the pretext that filing of Form No.67 is not mandatory relying on certain judgments of the Tribunal. With due respect to the judicial authorities who had rendered in favour of the tax payers like that of the Appellant, it is brought on record that filing of Form no.67 is mandatory to claim the benefit of Foreign Tax Credit. 4.3. Taxes are paid in an alien nation, the particulars of which can never be verified by the Income tax Authorities. It is for such reason that Form no.67 which consists of 4 parts has a verification column, affirming that the claim of the FTC to the best of the knowledge and belief of the Appellant is true and correct. Providing credit of FTC in

8 ITA No.818/M/2024 Mr. Sumeet Subhash Narang the absence of such verification is not logical while the authorities erred in failing to comprehend that the claims are otherwise not verifiable. Further, Rule 129(8) incorporates the word "Shall", which imply that filing of Form no.67 before the time limit u/s.139(1) [now extended to 139(4)] is directory/mandatory. Having failed to file the same, the CPC was correct in denying the credit of FTC paid abroad.” 6. Aggrieved by the order of the Ld. CIT (A), the appellant has filed this appeal. During the course of hearing before us, the appellant has submitted that this issue is covered in his favour by the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. Principal Commissioner of Income Tax, order of the Mumbai Bench of the Hon'ble Income Tax Appellate Tribunal (ITAT) in the case of Mr. Rohan Hattangadi v. Commissioner of Income (Appeals), National faceless centre (NFAC), Delhi (ITA No. 1896/Mum/2022), Ms. Nirmala Murli Relwani v. Asstt. Director of Income-tax, CPC Bangalore (ITA No. 2094/Mum/2022), Mr. Anuj Bhagwati v. Deputy Commissioner of Income tax, Mumbai (ITA No.1844/Mum/2022) and Ms. Sonakshi Sinha vs. Commissioner of Income tax (Appeals), NFAC Delhi (ITA No.1704/Mum/2022) and several other orders of

9 ITA No.818/M/2024 Mr. Sumeet Subhash Narang the Hon'ble Tribunal on which reliance was placed during the appellate proceedings. 7. We have considered the submissions made by the appellant stated as above. The facts of the case are not disputed. What is disputed is that the Ld. CIT (A) has erred in confirming the action of the CPC on the ground that form no. 67 was not filed before the due date of filing the return of income u/s. 139 of the act. The appellant, through his paper book, has placed reliance on the various decisions of the Hon'ble ITAT in its favour where FTC was allowed in case of delay in filing Form No. 67. The relevant decisions, as quoted by the appellant, are given as under:- Hon’ble ITAT, in the case of Ms. Brinda Rama Krishna vs. Income Tax Officer, Ward 5(3)(1) Bangalore (ITA No.454/Bang/2021), has held, “I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in Filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the Provisions of the Act and the Rules cannot be contrary to the Act."... The Mumbai Bench of the Hon'ble ITAT in the case of Rohan Hattangadi (Supra) accepted the decision taken in Brinda ramakrishna

10 ITA No.818/M/2024 Mr. Sumeet Subhash Narang (Bangalore) case allowed FTC even when Form 67 was filed much after the due date of filing ROI under section 139(1) of the Act. Also, in Sonakshi Sinha (Supra), after considering the decision of the Hon'ble Supreme Court in the Civil Appeal Number 1449 of 2022 in case of PCIT versus Wipro Ltd. dated 11 July 2022, has allowed FTC even when Form 67 was filed much after the due date of filing ROI under Section 139(1) of the Act. Further, the Mumbai Bench of the Hon'ble ITAT in the case of Nirmala Murali Relwani (Supra) and Anuj Bhagwati (Supra) relying upon Sonakshi Sinha case and Brindha Ramakrishnan allowed FTC even when Form 67 was filed much after the due date of filing ROI under Section 139(1) of the Act. In the case of M/s. 42 Hertz Software India Pvt. Ltd. vs. ACIT, Circle 3(1)(1) Bangalore (ITA No. 29/Bang/2021) (enclosed as Paperbook Page Nos. 64 to 69), the Hon'ble ITAT after following the order in the case of Ms. Brinda Ramakrishna (supra), held as under: “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 in (2021) 12 ITR 471." Hon'ble ITAT in the case of Vinodkumar Lakshmipathi vs. CIT(A) , NFAC [ITA. 680 /Bang/2022] (Paperbook Page Nos. 70 to 79),

11 ITA No.818/M/2024 Mr. Sumeet Subhash Narang wherein, it is held that FTC can be allowed even when Form 67 is filed before the Ld. CIT(A). The relevant extract of Hon'ble ITAT reads as under: “We have heard the rival submissions and perused the materials available on record. The claim of the assessee has been denied while processing return of the assessee u/s. 143(1) of the Income-tax Act, 1961 ['the Act' for short] dated 11.6.2020 on the reason that assessee has not filed the Form No.67 along with return of income so as to claim the foreign tax credit. However, the same has been filed before the Ld. CIT(A) on 22.9.2018. The assessee has made the contention before Ld. CIT(A) that assessee has offered the foreign income of Rs.2,01,024/- and also paid tax on it at Rs.63,342/- and levying of additional tax of Rs.28,431/-is amounting to double taxation. In our opinion, the plea of the assessee is justified. The assessee has filed the copy of Form No.67 before Ld. CIT(A). He ought to have given direction to give credit for foreign tax which has been paid as per Form 67. In view of the above order of the Tribunal, we direct the Ld. assessing officer to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT (A).” The D.R. on the other hand, simply relied on the order of the Ld. CIT (A).

12 ITA No.818/M/2024 Mr. Sumeet Subhash Narang 8. We have considered the rival submissions and it is found that though there is delay in filing form 67 during the filing of return of income, however, there was reasonable cause for the said delay due to Covid- 19 Pandemic. Considering the decisions of the various tribunals, as quoted above, the AO is directed to take a lenient view and allow the FTC of Rs.15,33,519/- 9. In the result, the appeal is allowed. Order pronounced in the open court on 26.06.2024.

Sd/- Sd/- (AMIT SHUKLA) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 26.06.2024. Snehal C. Ayare, Stenographer

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.