KASPER PIETER TIDEMAN,PUNE vs. INCOME TAX OFFICER, WARD-7(1), PUNE, PUNE

The assessee has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law the CPC, Bengaluru erred in not granting the Foreign Tax Credit of Rs.1,48,111/- claimed by the appellant in his return of income by making a disallowance in intimation u/s 143(1). 2. On the facts and in the circumstances of the case and in law the CPC, Bengaluru erred in not taking cognizance of the fact that the appellant has duly paid the taxes on his income arising in USA and Netherland in the respective country and is eligible for foreign tax credit in India, in the light of the provisions of section 90 of the Income Tax Act, 1961 and the Article 25 of India - USA and Article 23 of India-Netherland DTAA. 3. On the facts and in the circumstances of the case and in law the CPC, Bengaluru erred in not appreciating the fact that the disallowance of foreign tax credit for the taxes duly paid in USA and Netherland shall result into double taxation which is contrary to the provision of Income Tax Act, 1961 and the DTAA.

Briefly stated, the assessee filed its return for AY 2021-22 on 08.10.2021 declaring income of Rs.28,88,780/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (the “Act”) on 12.05.2022 by the Ld. Assessing Officer, CPC, Bengaluru (“AO”) and intimation was issued as per which Foreign Tax Credit (“FTC”) of Rs.1,48,111/- of the assessee’s United States of America & Netherlands income was not considered even though Form 67 was filed on 08.01.2022 before the return was processed by the Ld. AO.

Aggrieved, the assessee filed appeal before the Ld. CIT(A) who confirmed the order of the Ld. AO on the ground that the assessee failed to furnish Form 67 on or before the due date for furnishing the return prescribed under section 139(1) of the Act which is mandatory according to Rule 128(9) of the Income Tax Rules, 1962 (the “Rules”).

The contentions raised by the assessee did not convince the Ld. CIT(A) who denied relief to the assessee by observing, inter-alia as follows in paras 7.6 to 10.3 of his order :- “7.6. It is clear from above provisions that a resident taxpayer who has credit for any foreign tax paid in a country outside India by way of deduction or otherwise, will be required to furnish statement in Form 67 before due date specified under sub-section (1) of 139 to claim credit of such taxes. 7.7 In the instant case, the appellant had filed form 67 on 08/01/2022, however as per the intimation u/s 143(1) of the Act, the due date for filing of the ITR was 31/12/2021. Clearly the appellant had not followed provisions of rule 128 (9) of the Income Tax Rules. Hence, the AO had rightly denied the foreign tax credit. 7.8 The appellant had relied upon the decisions of Hon'ble ITAT Mumbai and Hon'ble ITAT Bangalore in support of his claims, however Hon'ble Supreme court in the case of PCIT-III, Bengaluru vs Wipro Ltd. in CIVIL APPEAL NO. 1449 OF 2022 (Arising out of SLP(Civil) No. 7620/2021) order dated 11/07/2022 held as under- "14. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 108 (8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 108 (8) of the IT Act. We hold that for claiming the benefit under Section 108 (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with. Accordingly, the question of law is answered in favour of the Revenue and against the assessee. The orders passed by the High Court as well as ITAT taking a contrary view are hereby set aside and it is held that the assessee shall not be entitled to the benefit under Section 1 DB (8) of the IT Act on noncompliance of the twin conditions as provided under

Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds relate thereto.

The Ld. AR submitted that the impugned issue is squarely covered in favour of the assessee by the decisions of various Benches of the Tribunal. He reiterated the contentions raised before the Ld. CIT(A) and cited various judicial precedents relied upon by the assessee in support of its claim on allowability of FTC before the Ld. CIT(A).

The Ld. DR, on the other hand, supported the order of the Ld. AO/CIT(A).

We have considered the submissions of the parties and perused the records. It is evident that the solitary ground of denial of the claim of the assessee for FTC is delay in filing Form 67. It is an admitted position that the assessee filed Form 67 on 08.01.2022 before the end of the relevant AY 2021-22 which is in conformity with the CBDT notification No. 100/2022 amending sub-rule (9) of Rule 128 of the Rules. The Rule nowhere provides that if Form 67 is not filed within time, relief sought by the assessee under section 90 of the Act would be denied. The assessee filed Form 67 before the return for the relevant AY was processed u/s 143(1) of the Act by the Ld. AO.

Various coordinate benches of the Tribunal have held that filing Form 67 is a procedural/directory requirement and is not a mandatory requirement.

We find the Hyderabad Bench of Tribunal in the case of Baburao Atluri Vs. DCIT vide ITA Nos.108 & 118/Hyd/2022, order dated 22.07.2022 has allowed the FTC despite delay in filing the FTC certificate in form No.67 by observing 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 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 ld. Counsel for the assessee that filing of foreign tax credit certificate in Form-67 is directory in nature and not mandatory and therefore the NFAC is not justified in denying the Foreign Tax Credit.

Similar view has been taken by the Co-ordinate Bench of the Pune Tribunal in the cases of JCIT Vs. Raj Surendra Mohan Hajela in ITA No. 470/PUN/2023, order dated 14.05.2024; Deelip Kanhailal Chawla Vs. ITO in ITA No. 87/PUN/2023, order dated 09.03.2023 and Milind Moreshwar Pimpalkhare Vs. DDIT, CPC in ITA No. 1031/PUN/2023, order dated 13.10.2023.

Reliance placed by the Ld. CIT(A) on the decision of the Hon’ble Supreme Court in the case of State of Jharkhand Vs. Ambay Cements 2005) 1 SCC 368 and in the case of PCIT-III, Bengaluru Vs. Wipro Ltd. in CIVIL APPEAL NO. 1449 OF 2022 (Arising out of SLP(Civil) No. 7620/2021), in our view, is completely misplaced as he himself observed in para 7.8 of his order that these decisions were rendered in context of different section and not with respect to claim of FTC.

Since the FTC certificate/statement in Form No. 67 was not examined by the Ld. AO, therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it appropriate to restore the issue to the file of the Ld. AO with the direction to verify Form No. 67 and allow consequential FTC in accordance with law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.