“foreign tax credit”
The decision most relied on for foreign tax credit is Chandra Kishore Jha v. Mahavir Prasad (8 SCC 266), cited in 163 judgments on BharatTax.
Leading authorities on foreign tax credit
If a statute or law prescribes that a thing must be done in a particular manner, then it must be done in that manner alone and in no other way. This principle mandates strict adherence to statutory procedures.
Foreign Tax Credit (FTC) is allowable even if no tax is paid in India on the corresponding income due to deductions under sections 10A or 10AA, or losses in other units. The scope of income eligible for deduction under Section 10AA includes interest on deposits and realized gains on forward contracts.
The filing of Form 67 for claiming Foreign Tax Credit (FTC) is a directory requirement, not mandatory. Rule 128(9) does not provide for disallowance of FTC due to delay in filing this form. Double Taxation Avoidance Agreements (DTAAs) override domestic law.
For claiming relief under Chapter VI-A deductions like Section 80IB or 80IA, the audit report in Form 10CCB is not mandatory to be filed with the return of income, but can be submitted before the assessment is completed.
Procedural law serves as an aid to justice, not an obstruction, and should not ordinarily be construed as mandatory; it is subservient to substantive justice.
The claim for Foreign Tax Credit cannot be denied solely due to a delay in filing Form-67, as the requirement for filing Form-67 under Rule 128(9) is considered directory and not mandatory. The provisions of a Double Taxation Avoidance Agreement (DTAA) prevail over the Income-tax Act, 1961.
An assessee's claim for Foreign Tax Credit (FTC) cannot be rejected merely because Form 67 was filed after the due date under section 139(1), provided it is filed before the completion of assessment proceedings.
The requirement to file Form 67 by the due date for claiming foreign tax credit is directory, not mandatory, if filed before the completion of assessment proceedings.
