MANJU KRISHNAPPA ,BANGALORE vs. ADDITIONAL DIRECTOR OF INCOME TAX APPEAL,CPC BANGALORE AND THE INCOME TAX OFFICER WARD 1(2)BANGALORE, BANGALORE

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ITA 569/BANG/2024Status: DisposedITAT Bangalore08 May 2024AY 2019-20Bench: SHRI CHANDRA POOJARI (Accountant Member), SHRI KESHAV DUBEY (Judicial Member)5 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that delay in filing Form 67 does not disallow FTC, as filing the form is a directory requirement and the Double Taxation Avoidance Agreement (DTAA) overrides the Act and Rules. The Tribunal directed the Assessing Officer to grant the FTC after due verification.

What were the facts?

The assessee, a resident of India, earned salary income in Germany and claimed foreign tax credit (FTC) in India. The tax authorities disallowed the FTC due to a delay in filing Form 67, and also erroneously calculated interest under sections 234B and 234C.

What were the issues?

Whether delay in filing Form 67 bars the claim for foreign tax credit, and whether DTAA provisions override domestic tax rules regarding FTC.

Which sections of the Income-tax Act were involved?

Section 90,Section 139(1),Section 139(5),Section 143(1),Section 234B,Section 234C

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE

Before: SHRI CHANDRA POOJARI & SHRI KESHAV DUBEY

For Appellant: Smt. Itu Singh, A.R
For Respondent: Shri V. Parithivel, D.R
Hearing: 08.05.2024Pronounced: 08.05.2024

Date of Hearing : 08.05.2024 Date of Pronouncement : 08.05.2024 O R D E R

PER KESHAV DUBEY, JUDICIAL MEMBER:

1.

This appeal by assessee is emanated from the order of NFAC for the assessment year 2019-20 dated 31.1.2024. The assessee has raised following grounds of appeal:

Mr Manju Krishnappa, Bangalore Page 2 of 5

2.

Facts of the case are that the appellant, a resident and ordinarily resident (ROR) of India for AY 2018-19, filed his original return of income on 30 August 2019 under section 139(1) of the Income Tax Act, 1961 ("the Act"). Further the appellant filed revised return of income under section 139(5) on August 12, 2020. The appellant received an intimation under section 143(1) of the Act dated March 23, 2021 (received on 24 March 2021). In the intimation, there is a demand raised of INR 6,06,260 out of which demand of INR 5,85,766 is erroneous on account of the following : I. Non grant of foreign tax credit of INR 4,45,656 2.1 The appellant is a resident and ordinarily resident (ROR) in India during FY 201819 as per the provisions of the Act and accordingly, subject to tax on his global income in India during FY 2018-19. The assessee moved to Germany on 1 November 2018 for the purpose of employment and was rendering services in Germany with effect from 1 November 2018. The salary income earned during the period November 2018 to March 2019 is subject to tax in both countries, i.e. in Germany and in India (under their respective domestic tax laws): Since the assessee qualifies as ROR in India, he is eligible to avail credit of taxes paid in Germany, in accordance with section 90 of the Act read with Article 23 of the double tax avoidance agreement entered between India and Germany.

Where a resident of the Republic of India derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in the Federal Republic of Germany, the Republic of India shall allow as a deduction from the tax Mr Manju Krishnappa, Bangalore Page 3 of 5 on such income of that resident an amount equal to the income-tax paid in the Federal Republic of Germany, whether directly or by deduction.......

. 2.1.1 Accordingly, while filing his return of income in India, the assessee and claimed the following foreign tax credit of INR 4,45,656 (being lower of average tax rate on doubly taxed income in India and actual taxes paid on income earned in Germany). Also, the assessee has filed Form 67 on the income tax portal along with the proof of the taxes paid outside India.

II. Interest under section 234B and 234C of the Act 2.2 Consequent to the above, the learned AO has erroneously determined the interest under section 234B of the Act as INR 2,22,122 instead of INR 1,04,520 and the interest under section 234C of the Act is erroneously determined as INR 64,529 instead of INR 42,020. Being aggrieved, the assessee has preferred this appeal. The assessee craves leave to place further facts and evidences in support of its claims, contentions and grounds of appeal at or before the hearing of the appeal.

3. After hearing both the parties, we are of the opinion that similar issue came for consideration before this Tribunal in the case of Ms. Brinda Ramakrishna Vs. ITO (2022) 193 ITD 840 (Bangalore Trib.), wherein held as under: 16. “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. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee’s application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I Mr Manju Krishnappa, Bangalore Page 4 of 5 therefore do not agree with the submission of the learned DR in this regard.”

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