2023 (9) TMI 31 - AT - Income Tax

Denial of FTC - delay in filing Form 67 - HELD THAT - It is an admitted position that the assessee filed Form 67 on 26.03.2021 alongwith the revised return before the end of the relevant AY 2020-21 which is in conformity with the CBDT notification No. 100/2022 amending Sub Rule 9 of Rule 128 of the Rules. Various coordinate benches of the Tribunal have held that filing Form 67 is a procedural/directory requirement and is not a mandatory requirement. We, therefore, disagree with the view of the CIT(A) on the point - As decided in Miss Brinda Rama Krishna 2022 (2) TMI 752 - ITAT BANGALORE as held 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. Thus we hereby direct the AO to allow the impugned credit of FTC to the assessee.

Summary

Issues involved:
The appeal challenges the denial of Foreign Tax Credit (FTC) to the assessee for Assessment Year 2020-21 based on the delay in filing Form 67, as per the Income Tax Act, 1961 and the Income Tax Rules, 1962.

Issue 1: Foreign Tax Credit Claim
The assessee contended that the FTC claim of Rs. 161528 should have been allowed, despite filing Form 67 after the due date specified for the income tax return. The assessee relied on CBDT Notification No. 100/2022 which extended the time limit for filing Form 67 until the end of the assessment year. The assessee argued that the procedural requirement of filing Form 67 should not extinguish the substantial right to claim FTC, citing relevant legal precedents.

Issue 2: Denial of FTC Claim
The Commissioner of Income Tax (Appeals) denied the FTC claim, stating that the non-furnishing of Form 67 before the due date under section 139(1) of the Act is a stringent requirement for the claim. The Commissioner emphasized that procedural requirements should be followed, and the failure to file Form 67 on time rendered the appellant ineligible for FTC. The Commissioner upheld the Assessing Officer's decision to reject the claim under section 154 of the Act.

Decision:
The Appellate Tribunal disagreed with the Commissioner's view and ruled in favor of the assessee. The Tribunal considered filing Form 67 as a procedural/directory requirement, not a mandatory one. Referring to a similar case, the Tribunal highlighted that the delay in filing Form 67 should not lead to the disallowance of the FTC claim. The Tribunal held that the DTAA prevails over domestic laws, and the Rules cannot contradict the Act. Therefore, the Tribunal directed the Assessing Officer to allow the FTC to the assessee based on the legal interpretation and precedents cited in the case.

Separate Judgment:
The judgment was pronounced by Ms. Astha Chandra, Judicial Member, and Shri Shamim Yahya, Accountant Member, on 29th August 2023.