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2022 (12) TMI 1082 - AT - Income TaxForeign Tax Credit - Denial of deduction on the ground of belated filing of Form 67 - whether mere late fling of Form 67 would result incomplete denial of tax which has been deposited by the assesse in USA where services were rendered? - HELD THAT - We have perused the Article 25 in the applicable DTAA between India and USA and also Rule 128 of the rules and provisions of Section 90(2) of the Act. Rule 128(9) of the rules provides that Form 67 should be filed on or before the due date of return of income however we also observe that the said Rule nowhere states that in case of late filing of Form 67 the credit of FTC which is deposited by the assesse in foreign country would be denied. In our considered view the FTC can not be denied to the assesse merely for late filing of Form 67 as the it is procedural formality on the part of the assesse.We have also perused the various decisions filed before us by assesse in defence of his argument that FTC cannot be denied merely on the basis of late filing of Form 67. We have perused the decision of Co-ordinate Bench of Bangalore in the case of M/s Brinda Rama Krishna 2022 (2) TMI 752 - ITAT BANGALORE and find that similar issue has been decided in favour of the assessee. We also note that similar issue also has been decided 2022 (9) TMI 926 - ITAT JAIPUR wherein the Co-ordinate Bench has allowed FTC by holding that the filing of form 67 is a procedural formality and could not the basis for denial of FTC to the assessee. Appeal of the assessee allowed.
Issues:
1. Denial of Foreign Tax Credit (FTC) to the assessee based on belated filing of Form 67. Analysis: The appeal was filed against the order of the Ld. Commissioner of Income Tax(Appeals) for the AY 2020-21, specifically challenging the denial of FTC to the assessee due to late filing of Form 67. The assessee, an individual and tax resident of India, filed the return of income belatedly, claiming FTC of Rs. 20,92,790 under Section 90(2) of the Income Tax Act. However, the claim was denied by the Assessing Officer (AO) due to the late filing of Form 67 as per Rule 128 of the Income Tax Rules, 1962. The Ld. CIT(A) upheld the AO's decision, stating that the assessee did not fulfill the conditions for claiming FTC and dismissed the appeal. The Appellate Tribunal noted that the assessee's income was taxable in India, and the denial of FTC was solely based on the late filing of Form 67, which is a procedural requirement. The Tribunal analyzed Rule 128 of the Rules, Section 90(2) of the Act, and the applicable DTAA between India and the USA. The Tribunal observed that Rule 128(9) mandates filing Form 67 before the due date of the income tax return, but it does not explicitly state that late filing would result in denial of FTC. Referring to relevant case laws, including decisions by Co-ordinate Benches, the Tribunal emphasized that the filing of Form 67 is a procedural formality and cannot be the sole basis for denying FTC to the assessee. The Tribunal cited precedents where similar issues were decided in favor of the assessee, allowing the appeal and granting the FTC to the assessee. In conclusion, the Appellate Tribunal allowed the appeal of the assessee, overturning the decision to deny FTC based on the late filing of Form 67. The judgment highlighted that procedural requirements like Form 67 should not obstruct legitimate claims for FTC, especially when tax has been paid in a foreign country. The decision was based on a thorough analysis of relevant provisions, case laws, and the overriding principle that DTAA prevails over domestic rules.
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