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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” , HYDERABAD
Before: SHRI LALIET KUMAR & SHRI MADHUSUDAN SAWDIA, ACCOUNANT MEMBER
O R D E R PER LALIET KUMAR, J.M. The appeal of the assessee for A.Y. 2020-21 arises from the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 14.09.2023 invoking proceedings under section 154 of the Income Tax Act, 1961 (in short, “the Act”).
The grounds raised by the assessee read as under :
“1. In the facts and circumstances of the case, the order of Ld. CIT(A) is not sustainable on in law or facts.
2. After admitting the appeal by issue of notice u/s 250, the Ld. CIT(A) ought not to have dismissed the appeal on technical grounds.
3. In the facts and circumstances of the case, the Ld. CIT(A) ought to have appreciated that the assessee has given valid grounds of the delay.
4. In the facts and circumstances of the case, the Ld. CIT(A) ought to have decided the case on merits and granted relief as prayed.
5. In the facts and circumstances of the case, the Ld. CIT(A) ought to have appreciated that the relief prayed for by the assessee is justified and is supported by judicial pronouncements.”
The brief facts of the case are that assessee is a private limited company and resident of India. During FY 2019-20 relevant to AY 2020-21 the assessee company received an amount equivalent to INR 2,45,39,932/- from Software Applications & Information Solutions, Botswana. The assessee company fled its return of income for AY 2020¬21 on 02-01-2021 admitting total income of Rs.69,15,240/-. In the return of income in schedule FS1 (page 69 and 70 of the return) the assessee company has clearly mentioned that it has received Rs.2,45,39,932/- from Botswana and tax relief of Rs.17,97,963/- was also claimed. It is submitted that the payers of the above amount have deducted an amount of Rs.27,39,892/- (2,93,789 pula at the conversion rate of Rs.6.51 per pula) as withholding tax. This was remitted to Botswana Unified Revenue Service on 03-06-2020 as per the Certificate issued by the authority. Out of Rs.29,37,882/- withheld, the assessee company claimed tax credit of Rs. 17,97,963/- as per article 13 of India-Botswana DTAA. 2 Therefore, the assessee company did not pay any tax along with the return filed. While processing the return under section 143(1) the Foreign Tax Credit of Rs.17,97,963/- was not allowed to the assessee company, probably for want of Form No.67. The assessee company filed a rectification petition enclosing Form no.67. The CPC passed order under section 154 on 22-08-2022 wherein again the Foreign Tax Credit claimed was not allowed and demand of Rs.22,66,320/- was raised. The present appeal is filed against the demand raised in the order passed under section 154.
Feeling aggrieved with the order passed u/s 154 of the Act, assessee filed an appeal before the ld.CIT(A), who dismissed the appeal of assessee, as inadmissible.
Before us, ld.AR submitted that the ld.CIT(A) has wrongly dismissed the appeal and that the ld.CIT(A) should not dismiss the appeal on technical grounds. Ld.AR further submitted that as the assessee has merits, matter may kindly be remitted back to the file of Assessing Officer for proper verification of Form 67, so as to enable it to get FTC.
Per contra, the ld.DR relied upon the orders of lower authorities.
We have heard the rival contentions of both the parties and perused the material available on record and also the orders passed by the lower authorities. Undoubtedly, the ld.CIT(A) dismissed the appeal of the assessee on technical grounds. The merits of the assessee’s appeal before the ld.CIT(A) have neither been discussed nor decided by the ld.CIT(A). In view of the above reasons, in our view, the ends of justice will be met if the matter is remanded back to the file of jurisdictional Assessing Officer to verify whether the assessee filed Form 67 or not and thereafter give credit of FTC as per Form 67 for the assessment year under consideration, in accordance with law.
7.1. We are further of the considered opinion that this issue is also squarely covered by the decision of the Co-ordinate Bench of the Tribunal in the case of Natco Pharma Limited vs. DCIT, in dt. 31/07/2023, wherein the identical issue has been decided as under:
“10. Learned AR submits that filing of Form 67 in accordance with rule 128 of the tax rules is only a procedural requirement to enable the tax authorities to verify the FTC available to the assessee, but it does not take away altogether the right of the assessee to claim the FTC.
Insofar as this issue is concerned, this is no longer res integra and we find that the Bangalore Bench of the Tribunal in the case of M/s.42 Hertz Software India Pvt.Ltd vide order dated 07/03/2022 for the assessment year 2017-18, decided an identical issue and held that FTC cannot be denied to the assessee, where the assessee filed FTC in Form 67, although belatedly since filing of such Form 67 is not mandatory but directory in nature. 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 4 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”.
A Co-ordinate Bench of this Tribunal in the cases of Shridhar Madhav Diwan vs. DCIT in ITA No. 102/Hyd/2023, dated 24/05/2023 and Purushothama Reddy Vankireddy vs. ADIT in ITA No. 526/Hyd/2022, dated 05/12/2022, followed the same and held the issue in favour of the assessee. These decisions are applicable to the facts of the case and while respectfully following the said view, we hold the issue in favour of assessee.”
7.2 However, in the present case, the ld.CIT(A) has not verified whether the assessee has filed Form 67 or not and he dismissed the appeal on technical grounds. Hence, we are remanding the matter back to the file of Assessing Officer directing him to verify whether Form 67 was filed or not and thereafter, respectfully, following the decision of Natco Pharma Limited vs. DCIT (supra), allow the FTC as per Form 67 filed by the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.