DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4, NAGPUR vs. PRABHA NAGESHWAR RACHAKONDAWAR, NAGPUR
What did the Tribunal hold?
The Tribunal held that Rule 128(9) of the IT Rules does not mandate disallowance for delayed filing of Form 67, and that the filing of Form 67 is directory, not mandatory. The Tribunal also noted that the Madras High Court in Duraiswamy Kumaraswamy vs. PCIT has held Rule 128 to be directory.
What were the facts?
The assessee claimed foreign tax credit for taxes paid in the USA. The Assessing Officer (AO) did not allow the full credit because Form 67 was filed after the due date for filing the return. The CIT(A) allowed the assessee's appeal, directing the AO to allow the credit after verification.
What were the issues?
Whether the delay in filing Form 67 for claiming Foreign Tax Credit under Section 90/91 leads to disallowance of the credit, and if Rule 128 is mandatory or directory.
Which sections of the Income-tax Act were involved?
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- Duraiswamy Kumaraswamy v. PCIT50 citing460 ITR 615 · 2024 · HC
Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH : NAGOUR
Before: SHRI SATBEER SINGH GODARA
contention of appellant relied/cases mentioned, and order passed by CPC against which appeal has been preferred.
Hon’ble ITAT, Bangalore benches in the case of Brinda Rama krishna in the ITA.no.454/Bang/2021 dated 17.11.2021 has observed 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 (Hi) 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 5 ITA.No.85/NAG./2023 issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard.
In the result, the appeal is allowed.”
4.3. Similar view has also been held by Hon’ble Mumbai ITAT in the case of Anuj Bhagwati vs DCIT in ITA.No.1845/MUM/2022 (A.Y.2019-20) and Hon’ble Bangalore ITAT in the case of 42 Hertz Software India Pvt. Ltd., vs ITO in ITA.No.454/Bang/2021.
4.4. Thus, in view of the above observation of the Hon’ble ITAT, Mumbai and Bangalore benches, I direct the ld.AO to allow the claim of the appellant after making necessary verification with respect to the genuineness of the credit of taxes claimed u/s.90/91 of the Act and also verifying the fact that the corresponding income is disclosed in the return or not. The appellant is also directed to produce the requisite document before the Id AO as and when called for. Subject to the verification by the Id AO, the ground of the appellant is allowed.”
3.1. Learned DR vehemently argued that the CIT(A)'s herein has erred in law and on facts in directing the Assessing Officer to grant foreign tax credit to the assessee despite the fact that the latter had belatedly filed the corresponding Form- 67 under Rule 128 of I.T. Rules, 1963. I notice in this factual
6 ITA.No.85/NAG./2023 backdrop that case law in light of Duraiswamy Kumaraswamy vs. PCIT 460 ITR 615 (Madras) has already held the foregoing Rule 128 of I.T. Rules is directory only than mandatory in nature. This is indeed coupled with the fact that assessee had duly filed her Form-67 on 28.12.2021 well before sec.154 order in question dated 10.03.2022. Faced with this situation, I hardly see any merit in the Revenue’s instant sole substantive grievance. Ordered accordingly.
This Revenue’s appeal is dismissed in above terms.
Order pronounced in the open Court on 09.05.2024.
More judgments on Section 90
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