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2022 (9) TMI 1430 - AT - Income TaxForeign Tax Credit (FTC) - FTC denied in case of delay in filing Form No.6 - denial of FTC available to the Assessee merely because there was a delay in filling Form 67 i.e. it was filed after the due date for filing original return of income prescribed u/s 139(1) - HELD THAT - The said issue under consideration is no longer res integra. We note that on identical issue, the Co-ordinate Bench of ITAT, Bangalore in the case of Brinda Rama Krishna 2022 (2) TMI 752 - ITAT BANGALORE held 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 (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) is not fatal to the claim for FTC. The aforesaid decision has also been followed in the case of Sanjay Patil 2022 (5) TMI 953 - ITAT SURAT - Following the view expressed in the aforesaid decision, we hold that the Assessee is entitled to FTC and the AO is directed to allow the claim.
Issues Involved:
1. Denial of Foreign Tax Credit (FTC) due to delay in filing Form 67. 2. Procedural vs. substantive requirements for claiming FTC. 3. Applicability of Double Taxation Avoidance Agreement (DTAA) provisions. Detailed Analysis: 1. Denial of Foreign Tax Credit (FTC) due to delay in filing Form 67: The primary issue in this appeal revolves around the denial of FTC to the Assessee because Form 67 was filed after the due date for filing the original return of income under section 139(1) of the Income Tax Act. The NFAC rejected the Assessee's claim on the grounds that the claim was made beyond the due date and was not included in the original return, thereby constituting a fresh claim not permissible under rectification proceedings. 2. Procedural vs. substantive requirements for claiming FTC: The Assessee argued that the filing of Form 67 is a procedural requirement and that the delay in its submission should not result in the denial of FTC. The Tribunal referred to a prior decision by the ITAT Bangalore in the case of Brinda Ramakrishna, which held that Rule 128(9) does not mandate disallowance of FTC for delayed filing of Form 67. It was determined that the requirement to file Form 67 is directory and not mandatory. The Tribunal emphasized that procedural non-compliance should not extinguish the substantive right of the Assessee to claim FTC. 3. Applicability of Double Taxation Avoidance Agreement (DTAA) provisions: The Tribunal highlighted that the DTAA provisions override the Income Tax Act and the Rules. According to the DTAA between India and Australia, the Assessee is entitled to claim FTC for taxes paid in Australia. The Tribunal noted that neither Section 90 of the Act nor the DTAA stipulates that FTC should be disallowed for non-compliance with procedural requirements such as the timely filing of Form 67. The Tribunal also cited several judicial precedents and Supreme Court rulings that support the view that procedural requirements should not hinder the substantive rights granted under the DTAA. Conclusion: The Tribunal concluded that the Assessee is entitled to FTC and directed the Assessing Officer to allow the claim. The decision emphasized that the procedural requirement of filing Form 67 within the due date is not mandatory and that the DTAA provisions, which grant the substantive right to claim FTC, override procedural rules. The appeal was allowed in favor of the Assessee. Judgment: The appeal is allowed, and the Assessee is entitled to FTC. The AO is directed to allow the claim. The decision was pronounced in the open court.
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