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Facts
The Revenue's appeal for AY 2017-18 arose from an order denying Foreign Tax Credit of Rs.63,43,287/- due to delay in filing Form 67. The Revenue's appeal was filed 64 days beyond the due date. The assessee had filed Form 67 after the due date but before completion of assessment.
Held
The Tribunal held that the filing of Form 67 is directory, not mandatory, as Rule 128(9) does not prescribe disallowance for delayed filing, and neither does Section 90 or 91 of the Act. The assessee is eligible for Foreign Tax Credit as Form 67 was filed before the assessment completion.
Key Issues
Whether the delay in filing Form 67 by the assessee before the completion of assessment bars the claim for Foreign Tax Credit, and whether the Revenue's appeal is barred by limitation.
Sections Cited
Section 143(3), Section 90, Section 91, Rule 128(9), Section 139(1)
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
(िनधा�रणवष� / Assessment Year: 2017-2018) The Income Tax Officer, Vs. M/s. Sysarc Informatix Private Limited, Corporate Ward 6(3) New No.13, Old No.195, Chennai. Defence Officers Colony, Nandambakkam, Chennai 600 032. [PAN : AAECS 6891A] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Ms. Anitha, IRS, Addl. CIT. ��यथ� क� ओर से /Respondent by : Ms. S. Subashini, C.A. सुनवाई क� तार�ख/Date of Hearing : 09.09.2024 घोषणा क� तार�ख /Date of Pronouncement : 11.09.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)
Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 22-12-2023 in the matter of assessment order u/s 143(3) passed on 20-12-2019 denying Foreign Tax Credit of Rs.63,43,287/- as claimed by the assessee u/s 90/91 of the Act. The same was denied for delay in filing of requisite Form 67 along with return of income.
2. At the outset, it is noticed that this appeal by Revenue is barred by limitation by 64 days. The Revenue received the impugned appellate order on 22.12.2023 and appeal was to be filed on or before 20.02.2024 but actually it was filed on 25.04.2024 thereby there was a delay of 64 days. The Revenue has filed condonation petition stating the reason that due to ongoing transition on a Pan India scale from manual mode to digital mode, certain assessment and penalty cases were pushed to their office by the faceless charges at the fag end of time limitation. Due to this, entire wherewithal of his charge was diverted to completion of those cases for protecting the interests of the Revenue. Because of this, there was oversight in filing the appeal. When these facts were confronted to ld. Authorized Representative, she objected for condoning the delay. We find the cause as reasonable and hence, condone the delay and admit the appeal for adjudication.
The assessee has filed Form 67 beyond due date 30.11.2017 prescribed u/s 139(1). Form 67 was filed (uploaded) by the assessee on 12.12.2017 after extended due date and lay claim on the credit. AO denied the claim of Foreign Tax Credit for the reason that the assessee company has failed to submit the Form 67 within the due date prescribed u/s 139(1) of the Act. However, Ld. CIT(A) relied on the decision of the Hon’ble Madras High Court’s judgment in the case of Duraiswamy Kumaraswamy Vs. PCIT-8 Chennai (W.P.No.5834 of 2022 and W.M.P.Nos.5925 and W.M.P. Nos.5925 and 5927 of 2022) has deleted the addition made by the AO.
We find that this issue has been addressed by the Co-ordinate Bench in the case of Mrs. Venkatraman Lakshmi vs. ITO (ITA No.704/Chny/2023 dated 31-08- 2023) as under: - ‘’3. We find that this issue has been adjudicated by us in assessee’s favor in the decision of Shri Prakash Varadarajulu vs. DCIT (ITA No.990/Chny/2022 dated 16-02-2023) as under: - 4. We find that filing of Form 67 has been held to be directory and not mandatory in many decisions of the Tribunal. The Mumbai Tribunal, in its recent decision, titled as Sonakshi Sinha vs. CIT (142 Taxmann.com 414), held as under: - 12. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income-tax Rules, 1962 provides that the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under subsection (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd. (Supra) wherein following its earlier order in the case of Ms. Brinda Rama Krishna (supra) it was held that "one of the requirements of rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.
Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi v. CIT(A) [IT Appeal No. 680/Bang/2022, 6-9-2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67