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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: Shri Manjunatha G. & Shri K. Narasimha Chary
(निर्धारण वर्ा/Assessment Year: 2020-21) Rishi Khare Vs. ITO, Ward-12(6) Hyderabad Hyderabad [PAN : AMJPK4465G] (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri Pankaj Sancheti, AR रधजस् व द्वधरध/Revenue by:: Shri R.Kumaran, DR सुिवधई की तधरीख/Date of hearing: 18/12/2024 घोर्णध की तधरीख/Date of 30/12/2024 Pronouncement: आदेश / ORDER PER. MANJUNATHA G., A.M: This appeal filed by the assessee is directed against the order dated 13.05.2024 of the learned Commissioner of Income Tax (Appeals) [Ld.CIT(A)], National Faceless Appeal Centre, Delhi, pertaining to A.Y.2020-21.
At the outset, it is observed that the appeal has been filed with a delay of 45 days. The assessee filed a petition for condonation of delay and submitted that the assessee was not informed of the issuance of the order dated 13.05.2024 by the Ld.CIT(A) and he was under the genuine belief that the matter
2 was still under consideration. The assessee came to know of the order passed by the Ld.CIT(A) when his CA found the same on the income tax portal and on his advice, immediately, the assessee took steps to file appeal before the Tribunal, which caused the delay of 45 days. The assessee further submitted that the delay was not due to negligence, willful neglect or any intention to disregard the legal process, but purely the result of an inadvertent oversight. The assessee further submitted that he has always been a law abiding citizen and committed to fulfilling tax obligations. He, therefore, pleaded to condone the delay and admit the appeal for hearing in the interest of justice.
The Ld.DR on the other hand, opposing the petition filed by the assessee submitted that the reason given by the assessee is vague in nature and does not come under reasonable cause for condoning the delay of 45 days in filing the appeal. Therefore, the delay in filing the appeal should not be condoned.
We have heard both the parties and considered the relevant reasons given by the assessee for the delay in filing the appeal in the affidavit filed in support of his petition and after considering the reasons given by the assessee, we find that the assessee was not aware of the appellate order passed by the Ld.CIT(A), since he has not received any communication on the email address provided until it was found by his Chartered Accountant on the Income Tax portal. We, further note that it is quite possible in the era of e-filing system, many people miss out various communications issued by the authorities, due to ignorance or non-availability of relevant credentials to oversee
3 the ITBA portal to check various proceedings pending before the authorities. Therefore, in our considered view, the assessee is prone to miss out the communications issued by the Ld.CIT(A). Thus, by taking into account, the facts and circumstances of the case and also the reason that the assessee is a regular filer of income tax, we condone the delay in filing of the appeal before the Tribunal and admit the appeal filed by the assessee.
The brief facts of the case are that the assessee had filed his return of income for the A.Y.2020-21 on 10.01.2021, declaring total income of Rs.26,45,738/-, which consists of income from salary received from M/s Thrymr Software GMBH, Germany and Thrymr Software Private Limited, India. The return of income filed by the assessee was processed by the Assessing Officer/CPC and intimation u/s 143(1) of the Income tax Act, 1961 (“the Act”) was issued and determined the total tax payable at Rs.3,44,470/-, by denying Foreign Tax Credit (“FTC”) of Rs.2,37,156/- for non-submission of return of income along with Form 67 for claiming FTC in terms of section 90 of the Act r.w.s. Article 23 of India Germany Tax Treaty, Double Tax Avoidance Agreement (“DTAA”).
Being aggrieved, the assessee carried the matter before the Ld.CIT(A) and submitted that the assessee has filed the return of income on 10.01.2021, within the extended due date for filing the return of income for the A.Y.2020-21 and also filed Form 67 on 30.03.2021, within the due date for filing the belated return of income u/s 139(5) of the Act. Therefore, submitted that the Assessing Officer/CPC erred in not allowing FTC of 4 Rs.2,37,156/-. The Ld.CIT(A), after considering the relevant submissions of the assessee and also taking note of Rule 128 of Income Tax Rules, 1962 (“IT Rules”), rejected the arguments of the assessee and upheld the reasons given by the Assessing Officer for denial of FTC, on the ground that the assessee has failed to file the return of income along with Form 67 on or before the due date for filing the return of income u/s 139(1) of the Act. The Ld.CIT(A) further held that although the assessee has filed Form 67 before the Assessing Officer passed order u/s 143(1) of the Act, because, the assessee has not filed relevant Form 67 on or before the extended due date for filing the return of income u/s 139(5) of the Act, the Form 67 filed by the assessee is non-est in law and the Assessing Officer has rightly denied the credit for FTC of Rs.2,37,156/-.
Aggrieved by the Ld.CIT(A) order, the assessee is now in appeal before the Tribunal.
8. The learned Counsel for the assessee, referring to paper book filed by the assessee, submitted that as per Press Information Bureau, Govt.of India, Ministry of Finance, the due date for filing return of income has been finally extended upto 31.01.2021, for the A.Y.2020-21, by considering the problem faced by the public on account of Covid pandemic. The assessee has filed the return of income on 10.01.2021, which is before the extended due date for filing the return of income u/s 139(1) of the Act. Therefore, the findings of the Ld.CIT(A) that the assessee has not filed the return of income on or before the due date for filing the return of income u/s 139(1) is incorrect.
5 Further, the assessee has also filed Form 67 on 31.03.2021, which is on or before the extended due date for filing the return of income u/s 139(5) of the Act. Since, the assessee has filed the return of income u/s 139(1) and also filed Form 67 on or before the extended due date for filing the return of income u/s 139(5) of the Act, the Assessing Officer ought to have allowed the credit for FTC. The learned Counsel for the assessee, further submitted that Form 67 filed by the assessee was very much available before the Assessing Officer, when he has passed assessment order u/s 143(1) of the Act. Therefore, he ought to have considered Form 67 and allowed FTC. In this regard, he relied on the decision of ITAT Hyderabad Benches in the case of Shri Ramesh Babu Jasti Vs.ITO dated [TS-745-ITAT- 2024(HYD)].
The Ld.DR on the other hand, supporting the order of the Ld.CIT(A), submitted that although the assessee has filed certain additional evidences, in the form of Circular and notification issued by CBDT, extending timelines for the A.Y.2020-21, but the fact remains that whether these documents have been filed before the Assessing Officer / Ld.CIT(A) or not is not forthcoming from the assessment records. Therefore, in order to verify the claim of the assessee, the matter may be remanded back to the file of the Assessing Officer for verification and decide the issue in accordance with law.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below.
6 There is no dispute with regard to the fact that the assessee had earned income from salary from India and from outside India. The assessee had also paid taxes on income earned from outside India and claimed credit for the taxes paid in foreign country, by filing Form 67 as per Rule 128 of IT Rules, 1962. The Assessing Officer/CPC denied credit for FTC on the ground that the assessee has filed Form 67 beyond the due date prescribed u/s 139(1) of the Act. We find that the due date for filing the return of income for the A.Y.2020-21 has been extended upto 31.01.2021, which is evident from Press Information Bureau, Govt.of India, Ministry of Finance Notification dated 30.12.2020. It is also an admitted fact that the assessee has filed the return of income on 10.01.2021, which is within the time allowed u/s 139(1) of the Act. Therefore, the findings of the Ld.CIT(A) that the assessee has not filed the return of income u/s 139(1) of the Act is incorrect. Further, the assessee had also filed Form 67 on 30.03.2021, which is on or before the due date for filing the return of income u/s 139(5) of the Act. Therefore, the findings of the Ld.CIT(A) that the assessee has not filed the Form 67 before the time allowed u/s 139(5) is also incorrect.
Having said so, let us come back to whether the Assessing Officer is right in denying the FTC, having noticed the fact that the assessee has earned income from outside India and also paid taxes on the said income. There is no dispute with regard to the fact that as per section 90 of the Act read with Article 23 of the DTAA, the assessee can claim credit for taxes paid in Germany. In order to claim FTC, certain conditions are provided
7 under Rule 128 of IT Rules and as per the said Rules, the statement in Form 67 shall be furnished on or before the due date specified for furnishing the return of income u/s 139(1) of the Act. Since the assessee has furnished the return of income for the assessment year under consideration on or before the extended due date for furnishing the return of income u/s 139(1) of the Act and further Form 67 has been filed on or before the due date for furnishing the return of income u/s 139(5) of the Act, in our considered view, the Assessing Officer ought to have allowed credit for FTC as per Form 67 filed by the assessee, when the assessee has filed Form 67 before the date when the Assessing Officer has passed order u/s 143(1) of the Act. This principle is supported by the decision of ITAT Hyderabad Benches in the case of Ramesh Babu Jasti Vs.ITO (supra), where the Tribunal has held as under :
“7. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the appellant has not filed Form 67 on or before the due date for filing of the return of income u/s 139(1) of the Act, in terms of section 90 of the I.T. Act, 1961 and Rule 128(9) of the I.T. Rules, 1962. However, such form 67 has been filed on or before the Assessing Officer passed the order u/s 143(1) of the Act which is evident from the date of intimation issued by the Assessing Officer u/s 143(1) of the Act for the A.Y 2020-21 i.e. on 24.12.2021 and the date of filing of Form 67 i.e. 1/4/2021. Since the appellant has filed Form 67 on or before the Assessing Officer passed the assessment order, in our considered view, the Assessing Officer ought to have given credit for taxes paid outside India when the global income of the appellant has been taxed in India. Further, a similar issue has been considered by the Coordinate Bench of the ITAT Hyderabad in the case of Shri Nagababu Kuchibhotla vs. Income Tax Officer in dated 27th Feb. 2024 where under identical set of facts the Tribunal directed the Assessing Officer to allow
8 credit for Foreign Taxes paid outside India. The relevant findings of the Tribunal are as under: “12. We find identical issue had come up before the Coordinate Bench of the Tribunal in the case of Govinda Rajulu Dhondu (Supra) wherein the Tribunal, following the decision of the Coordinate Bench of the Tribunal in the case of Baburao Alturi vs. Dy.CIT in and distinguishing the decision of the Vizag Bench of the Tribunal in the case of Muralikrishna Vaddi vs. ACIT/Dy.CIT (Supra) has restored the issue to the file of the Assessing Officer with a direction to allow the FTC after due verification. The relevant observation of the Tribunal from Para 8 to 9 read as under: “8. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case rejected the 154rectification application on the ground that Form No.67 was not furnished before the due date as provided u/s 139(1) in compliance to Rule 128(9). We find the learned CIT (A) NFAC upheld the action of the Assessing Officer in denying the relief for foreign tax credit, the reasons of which have already been reproduced in the preceding paragraph. We find an identical issue had come up before the Coordinate Bench of the Tribunal in the case of Shri Baburao Atluri (Supra) wherein the Tribunal, after considering various decisions, has allowed the foreign tax credit, although there was delay in filing of such Form 67 beyond the due date of filing of the return. Relevant observation of the Tribunal from Para 10 onwards read as under: “10. We have heard the rival arguments made by both the sides, perused the orders of the AO and NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case did not allow the Foreign Tax Credit (FTC) on the ground that Form No.67 has been filed beyond the due date of filing of the return. We 9 find the NFAC upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the learned Counsel for the assessee that filing of foreign tax credit certificate in Form-67 is directory in nature Baburao Atluri and not mandatory and therefore the NFAC is not justified in denying the Foreign Tax Credit.
11. We find the Bangalore Bench of the Tribunal in the case of M/s. 42 Hertz software India Pvt. Ltd (supra) while deciding an identical issue has held that FTC cannot be denied to the assessee, where the assessee filed FTC in Form No.67, although belatedly since filing of such Form 67 is not mandatory but directory in nature. The relevant observation of the Tribunal from para 6 onwards reads as under:- "6. There is no dispute that the Assessee is entitled to claim FTC. On perusal of provisions of Rule 128 (8) & (9), it is clear 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. In our view, 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.67. This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms.Brinda Kumar Krishna vs. ITO in by order dated 17/11/2021. 7. 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 10 Analysis Centre of Excellence (P.) Ltd. reported in (2021) 432 ITR 471.
We accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee. Accordingly, the grounds raised by assessee stands allowed for statistical purposes."
12. We further find, in the instant case, the delay in filing of the FTC certificate in Form-67 was explained to be due to non-receipt of the tax deduction certificate form the foreign deductor from Zambia within time for which the said Form-67 was filed belatedly by 14 days. It was stated that the tax jurisdiction of the Zambian deductor follow different period for taxing the income and have different due dates for filing the return as compared to India. So, Baburao Atluri far as the decision relied on by ld. DR in the case of Muralikrishna Vaddi(supra) is concerned, we find there is a delay of more than two years without any valid and reasonable cause. Therefore, the said decision in our opinion cannot be applicable to the facts of the present case. In any case, when there are two view possible, the view which is favourable to the assessee has to be followed as held by Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. reported in (1972) 88 ITR 192. Since, the assessee in the instant case has filed FTC certificate in Form No.67 with delay of only '14' days, therefore following the decision of the Bangalore Bench of the Tribunal in the case of M/s. 42 Hertz Software India Pvt.Ltd.(supra), we direct the AO to allow the FTC after due verification. The 11 grounds raised by the assessee are accordingly allowed.”
9. Since the facts of the instant case are identical to the facts of the present case, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal, we direct the Assessing Officer to allow the foreign tax credit of Rs.58,69,594/- after due verification. Grounds raised by the assessee are accordingly allowed.”
13. Respectfully following the decision of the Coordinate Bench of the Tribunal in the case of Govind Rajulu Dhondu (Supra) we restore the issue to the file of the Assessing Officer with similar direction to allow the FTC of Rs. 4,40,939/- after due verification. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.”
8. In this view of the matter and by respectfully following the order of the Coordinate Bench of the Tribunal in the case of Nagababu Kuchibhotla in dated 27/02/2024, we direct the Assessing Officer to verify Form 67 filed by the assessee to claim credit for Foreign Tax Credit and allow the credit for taxes paid outside India.”
In view of this matter and considering the facts and circumstances of the case and also by following the decision of ITAT Hyderabad Benches in the case of Ramesh Babu Jasti Vs.ITO (supra), we direct the Assessing Officer to allow credit for taxes paid outside India as per Form 67 filed by the assessee.
In the result, appeal filed by the assessee is allowed.
12 Order pronounced in the Open Court on 30th December, 2024.