2022 (12) TMI 525 - AT - Income Tax

Relief u/s. 90 - Foreign Tax Credit (FTC) - Appellant had filed the return of income and the said Form 67 filed was late by 14 days from the due date of filing the return of income - As submitted that the delay was due to reasons beyond the control of the appellant, inasmuch as the Tax Deduction Certificates were received from the foreign deductor from Zambia belatedly, the said Form No.67 was filed belatedly by 14 days - HELD THAT - 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. In the case of M/s. 42 Hertz software India Pvt.Ltd 2022 (3) TMI 834 - ITAT BANGALORE 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. 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. As 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 2022 (6) TMI 693 - ITAT VISAKHAPATNAM 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 in the case of CIT vs. Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT . 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 in the case of M/s. 42 Hertz Software India Pvt.Ltd. 2022 (3) TMI 834 - ITAT BANGALORE we direct the AO to allow the FTC after due verification. Assessee Appeal are allowed.

Summary

Issues: Delay in filing appeal, Double Taxation Relief u/s. 90/91, Details of Assets and Liabilities, Denial of Foreign Tax Credit under section 90/90A.

Delay in filing appeal: The assessee filed an appeal with a delay of 66 days, which was condoned after considering the reasons provided. The appeal was admitted for adjudication.

Double Taxation Relief u/s. 90/91: The assessee, engaged in exporting goods and providing services, claimed relief u/s. 90/91 in the return of income. However, the AO did not grant the credit of relief u/s. 90/90A due to the late filing of Form 67. The assessee argued that the delay was due to reasons beyond their control, such as late receipt of Tax Deduction Certificates from the foreign deductor. The NFAC upheld the AO's decision, stating that the procedural requirements for claiming Foreign Tax Credit are mandatory, and the delay in filing Form 67 led to the disallowance.

Denial of Foreign Tax Credit under section 90/90A: The assessee contended that filing Form 67 before the return of income is directory, not mandatory, citing a Tribunal decision. They argued that DTAA takes precedence over domestic laws, and the delay in filing Form 67 should not result in denial of Foreign Tax Credit. The Tribunal referred to a similar case where it was held that filing Form 67 belatedly does not warrant denial of Foreign Tax Credit. The delay in filing Form 67 was attributed to non-receipt of tax deduction certificates on time from the foreign deductor, justifying the delay. The Tribunal directed the AO to allow the Foreign Tax Credit after due verification, following the decision favoring the assessee.

Conclusion: The Tribunal allowed both appeals filed by the assessee, emphasizing that the delay in filing Form 67 for Foreign Tax Credit should not lead to denial of the credit, especially when valid reasons for the delay exist. The Tribunal's decision was based on the principle that procedural requirements should not override the entitlement to claim Foreign Tax Credit under DTAA.