9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 837 - AT - Income TaxEntitlement to foreign tax credit - assessee had filed Form 67 beyond the end of the relevant assessment year - violation of procedural norms - HELD THAT - Admittedly in the instant case, the Form 67 was filed by the assessee before the AO before the due date prescribed u/s 139(4) of the Act. This issue is no longer res integra in view of the decision of the coordinate Bangalore Bench in the case of Brinda Ramakrishna Vs. ITO 2022 (2) TMI 752 - ITAT BANGALORE On perusal of the Rule 128(9) of the Rules, it is nowhere provided that if the said Form 67 is not filed within the prescribed time, the relief as sought by the assessee u/s 90 of the Act would be denied. Either way the disallowance of FTC u/s 90 of the Act is not provided in the Act or in the Rules. Hence, it can be safely concluded that the intention of the legislature is not to deny the FTC merely on the ground that Form 67 was filed belatedly. This makes the filing of Form 67 a procedural requirement and hence to be construed only directional in nature and not mandatory. It is trite law that violation of procedural norms does not extinguish the substantive right of claiming the FTC credit. There are many sections in the Act which specifically deny deduction or exemption or relief in case the return/form is not filed within prescribed time limits such as sections 80AC, 80-1A(7), 10A(5) and 10A(5) etc, wherein there is specific provision for disallowance of deduction/exemption if audit report is not filed along with the return. We find that various Hon ble High Courts have taken a view that filing of audit report is directory and not mandatory. Such language is not used in Rule 128(9) of the Rules. Therefore, such condition cannot be read into Rule 128(9) of the Rules. Assessee appeal allowed.
Issues Involved:
1. Dismissal of appeal by NFAC without considering the appellant's submission. 2. Denial of Foreign Tax Credit (FTC) due to the late filing of Form 67. Summary: Issue 1: Dismissal of Appeal by NFAC The National Faceless Appeal Centre (NFAC) dismissed the appeal without considering the appellant's submission and sustained the addition based on conjecture and surmises without deciding the matter on merits of the case. The appellant argued that the filing of Form 67 before filing the return of income is directory in nature, not mandatory, and hence the dismissal of the appellate order is in law and liable to be deleted. Issue 2: Denial of Foreign Tax Credit (FTC)The assessee electronically filed its return of income on 15.01.2022, claiming a foreign tax credit of Rs. 30,10,546/-. The return was processed on 25.10.2022, but the FTC was denied as Form 67 was not filed. The assessee subsequently filed Form 67 and a rectification petition, which was dismissed on the grounds that Form 67 was not filed before the end of the relevant assessment year. The CIT(A) upheld this decision, stating that the assessee is bound to file Form 67 before the end of the relevant assessment year to claim relief under Section 90 of the Act. The Tribunal referenced Rule 128 of the Income Tax Rules, which outlines the requirements for claiming FTC. It noted that the issue is no longer res integra, citing a decision by the Bangalore Bench in the case of Brinda Ramakrishna Vs. ITO, where it was held that filing Form 67 is a procedural requirement and not mandatory. The Tribunal emphasized that neither Section 90 of the Act nor the DTAA provides that FTC shall be disallowed for non-compliance with procedural requirements, and FTC is a vested right of the assessee. The Tribunal also referenced decisions from various High Courts and the Supreme Court, which held that procedural requirements should not override substantive rights. It concluded that the intention of the legislature is not to deny FTC merely because Form 67 was filed belatedly, making the filing of Form 67 a procedural requirement and not mandatory. In conclusion, the Tribunal directed the Assessing Officer to grant FTC to the assessee, allowing the appeal. Order pronounced in the open court on 15/02/2024.
|
