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2023 (5) TMI 1287 - AT - Income TaxForeign tax credit - claim denied as assessee filed Form 67 delayed - part of the salary income was received by the assessee from outside India i.e. United Kingdom (UK) and remaining portion was earned by the assessee in India therefore assessee considered income earned in UK as part of his total income offered for taxation in India - HELD THAT - As decided in Brinda Ramakrishna 2022 (2) TMI 752 - ITAT BANGALORE not allowing FTC for the sole reason of delayed filing of Form 67 was held to be a mistake apparent on the record. Therefore it was held by the Coordinate Benches of the Tribunal in the cases supra that rectification application of the assessee for not allowing claim of FTC was maintainable and the Coordinate Bench of the Tribunal in the cases of Brinda Ramakrishna 2022 (2) TMI 752 - ITAT BANGALORE Bhaskar Dutta 2023 (1) TMI 534 - ITAT DELHI Sumedha Arora 2023 (3) TMI 719 - ITAT DELHI has held that Form 67 filed by the respective assessees even after the end of the relevant assessment year makes the assessee entitled to claim FTC . Therefore considering the facts of the present case the FTC deserves to be allowed to the assessee even if Form 67 was filed by the assessee after the due date of filing the return under section 139(1) of the IT Act 1961 and in our view not allowing foreign tax credit by AO (CPC) was nothing but a mistake apparent on record. Therefore we direct the revenue to allow the claim of the assessee.
Issues Involved:
1. Credit of taxes paid outside India. 2. Rejection of rectification application. 3. Mistake apparent on record. 4. Procedural requirement under Section 143(1) of the Income Tax Act, 1961. Summary: 1. Credit of Taxes Paid Outside India: The assessee contended that the CIT (A) erred in confirming the AO's decision to disallow the credit for taxes paid outside India while processing the Return of Income under Section 143(1) of the Income Tax Act, 1961. The assessee argued that this action was illegal, unjustified, arbitrary, and against the facts of the case. The assessee's income included earnings from the UK, for which taxes were paid and credit was claimed under Section 90/91 of the IT Act and the Double Taxation Avoidance Agreement (DTAA) between India and the UK. 2. Rejection of Rectification Application: The assessee's rectification application under Section 154 was rejected by the AO (CPC) on the grounds that the non-allowance of foreign tax credit (FTC) was not a mistake apparent on record. The CIT (A) upheld this decision, which the assessee argued was illegal and arbitrary. The assessee sought relief by allowing the rectification application and credit for taxes paid outside India. 3. Mistake Apparent on Record: The assessee argued that the rejection of the FTC due to the delayed filing of Form 67 was a mistake apparent on record. The assessee cited various judicial precedents, including decisions from the Supreme Court and High Courts, asserting that the provisions of the DTAA should override the ITA, and procedural lapses should not debar the assessee from claiming FTC. 4. Procedural Requirement Under Section 143(1): The assessee contended that the rejection of the FTC claim did not fall within the purview of Section 143(1) of the IT Act, 1961. The requirement to file Form 67, as per Rule 128 of the Income Tax Rules, 1962, was argued to be procedural and not mandatory. The assessee cited several judicial decisions supporting the view that procedural non-compliance should not result in the denial of substantive benefits. Tribunal's Decision: The Tribunal agreed with the assessee, stating that the provisions of the DTAA override the ITA, and the requirement to file Form 67 is procedural. The Tribunal referenced multiple judicial precedents supporting this view, including decisions from the ITAT Bangalore and Jaipur Benches. The Tribunal concluded that the rejection of the FTC due to the delayed filing of Form 67 was a mistake apparent on record and directed the revenue to allow the claim of the assessee. Conclusion: The appeal of the assessee was allowed, and the Tribunal directed the revenue to grant the foreign tax credit, emphasizing that procedural requirements should not override substantive entitlements under the DTAA.
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