2023 (4) TMI 1333 - AT - Income Tax

Denial of Foreign Tax Credit (FTC) u/s. 90 - appellant has failed to file the return of income for A.Y. 2019-20 as well as Form 67 within the due date of filing of return of income - amount of relief claimed as per revised return of income e-filed and not filed the same while filing the original return of income - HELD THAT - As assessee has filed Form-67 by filing revised return of income and not at the time of original return of income., similar issue in the case of Sonakshi Sinha 2022 (10) TMI 107 - ITAT MUMBAI and decided the issue in favour of the assessee as held it is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of Delay
2. Relief u/s 90 of the Income-tax Act, 1961
3. Consequential Levy of Interest u/s 234B and 234C

Summary:

1. Condonation of Delay:
The appeal was filed by the assessee with a delay of 190 days. The assessee submitted an affidavit explaining that the delay was due to the order being received in junk mail and subsequently overlooked. The Tribunal considered the submissions and referenced the case of M/s. Midas Polymer Compounds Pvt. Ltd. v. ACIT, where a delay of 2819 days was condoned by following various judicial precedents and the decision of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst Katiji and Ors. (167 ITR 471). The Tribunal emphasized that substantial justice should be preferred over technicalities. Consequently, the delay was condoned, and the appeal was admitted for adjudication.

2. Relief u/s 90 of the Income-tax Act, 1961:
The assessee filed a revised return of income claiming relief u/s 90 of the Act by filing Form 67 along with the revised return. The CPC processed the return u/s 143(1) and rejected the claim, which was upheld by the Ld. CIT(A) on the grounds that Form 67 was not filed within the due date specified u/s 139(1). The Tribunal, however, referenced the decision in Sonakshi Sinha v. CIT, where it was held that Form 67 could be filed before the completion of the assessment proceedings. The Tribunal noted that the requirement to file Form 67 by the due date is directory and not mandatory, as Rule 128(9) does not prescribe disallowance of FTC for delay in filing. Therefore, the Tribunal allowed the assessee's claim for relief u/s 90, as Form 67 was filed along with the revised return before the completion of the assessment.

3. Consequential Levy of Interest u/s 234B and 234C:
The Tribunal did not specifically address the issue of consequential levy of interest u/s 234B and 234C in detail, as the primary ground of relief u/s 90 was allowed, which would inherently affect the computation of interest.

Conclusion:
The appeal filed by the assessee was allowed, with the delay in filing condoned and the relief u/s 90 granted, following the principles of substantial justice over technicalities. The order was pronounced in the open court on 05th April, 2023.