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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS ASTHA CHANDRA
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA No.470/PUN/2023 Assessment Year : 2021-22
JCIT (OSD), Circle-12, Pune Raj Surendra Mohan Hajela 1101, Marvel Simrose, Lane E Vs. (Off, North Main Road), Koregaon Park, Pune – 411001 PAN : ABLPH1801J (Appellant) (Respondent) Assessee by : Shri Pramod Shingte Department by : Shri Sourabh Nayak, Addl.CIT Date of hearing : 07-05-2024 Date of pronouncement : 14-05-2024 O R D E R PER R. K. PANDA, VP :
This appeal filed by the Revenue is directed against the order dated 16.01.2023 of the CIT(A) / National Faceless Appeal Centre (NFAC), Delhi relating to assessment year 2021-22.
This is the second round of litigation before the Tribunal. In this case, the appeal filed by the Revenue was earlier partly allowed for statistical purposes by the Tribunal vide order dated 11.07.2023. Subsequently, the Tribunal vide Miscellaneous Application No.237/PUN/2023 order dated 19.01.2024 recalled its earlier order. Hence, this is a recalled matter.
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The Revenue in the instant appeal has challenged the order of CIT(A) / NFAC in allowing Foreign Tax Credit (hereinafter referred to as ‘FTC’) when the assessee has not filed Form No.67 before the due date of filing as per Rule 128(9) of the Income Tax Rules, 1962.
Facts of the case, in brief, are that the assessee is a Resident and ordinarily Resident as per Indian Income Tax law and also a tax Resident of USA. He filed his return of income on 21.10.2021 by claiming refund of Rs.34,380/- wherein FTC was claimed at Rs.4,32,10,256/- as per the provisions of section 90 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) read with the India- USA Double Tax Avoidance Agreement (‘DTAA’). The due date of filing return of income was extended up to 15.03.2022 due to Covid-19. The assessee filed form No.67 on 21.10.2021 wherein FTC was claimed at Rs.4,32,10,256/-. However, inadvertently assessment year was mentioned as 2020-21 instead of assessment year 2021-22. This form was filed well within the prescribed time limit. The return was processed u/s 143(1) of the Act by the CPC, Bengaluru on 22.03.2022, wherein the CPC did not allow FTC of Rs.4,32,10,256/- and thereby raised a demand at Rs.5,03,96,640/-. Subsequently, another form No.67 was filed on 28.03.2022 by mentioning the correct assessment year i.e. 2021-22 by claiming the FTC at Rs.4,32,10,256/-. However, the Assessing Officer at CPC did not allow the FTC of Rs.4,32,10,256/-. A rectification application dated 03.11.2022 was also rejected by the CPC in the order passed u/s 154 of the Act vide order dated 15.11.2022. Since, despite number of reminders the CPC did not allow the FTC of
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Rs.4,32,10,256/-, the assessee filed an appeal before the CIT(A) / NFAC, who vide his order dated 16.01.2023 directed the Assessing Officer to allow the FTC of Rs.4,32,10,256/-.
Aggrieved with such order of CIT(A) / NFAC, the Revenue is in appeal before the Tribunal.
The Ld. DR strongly challenged the order of CIT(A) / NFAC in allowing the FTC of Rs.4,32,10,256/- stating that when the assessee did not file form No.67 within the stipulated time of filing the return of income u/s 139(1) of the Act, the CIT(A) / NFAC was not justified in allowing such FTC.
The Ld. Counsel for the assessee on the other hand filed the following decisions and submitted that under identical circumstances, the Tribunal has allowed the FTC even though form No.67 was filed belatedly: i) Deelip Kanhailal Chawla vs. ITO vide ITA No.87/PUN/2023, order dated 09.03.2023 ii) Milind Moreshwar Pimpalkhare vs. DDIT, CPC vide ITA No.1031/PUN/2023, order dated 13.10.2023 iii) Duraiswamy Kumaraswamy vs. PCIT & Ors vide W.P. No.5834 of 2022 and W.M.P. Nos.5925 and 5927 of 2022, order dated 06.10.2023.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by the assessee in the case laws compilation. We find the Assessing Officer at
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CPC in the instant case rejected the claim of the FTC of Rs.4,32,10,256/- on the ground that the assessee has not filed form No.67 on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act. According to the Assessing Officer, as per CBDT’s Notification No.9, dated 19.09.2017, form No.67 shall precede the filing of return of income. Accordingly, the Assessing Officer rejected 154 application filed by the assessee. We find the Ld. CIT(A) / NFAC allowed the claim of FTC, reasons of which are already reproduced in the preceding paragraphs. We do not find any infirmity in the order of Ld. CIT(A) / NFAC directing the Assessing Officer to allow the claim of FTC on account of delay in filing of form No.67.
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 proceeding 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. 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:-
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“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 ITA no.454/Bang/2021 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 Analysis Centre of Excellence (P.) Ltd. reported in (2021) 432 ITR 471. 8. 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 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 Bangulur 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 grounds raised by the assessee are accordingly allowed.”
Similar view has been taken in various other decisions relied on by the Ld. Counsel for the assessee. However, since the certificate was not examined by the Assessing Officer, therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to
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the file of Assessing Officer with the direction to verify the form No.67 and allow consequential FTC. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced in the open Court on this day 14th of May, 2024.
Sd/- Sd/- (ASHTA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 14th May, 2024 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; प्रत्यर्थी / The Respondent 2. 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune गार्ड फाईल / Guard file. 5. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
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S.No. Details Date Initials Designation 1 Draft dictated on 07.05.2024 Sr. PS/PS 2 Draft placed before author 08.05.2024 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order