2023 (10) TMI 1433 - AT - Income Tax

Denial of Foreign Tax Credit (FTC) - assessee filed requisite Form No. 67 as prescribed under Rule 128 beyond the due date prescribed u/s. 139(1) - HELD THAT - The assessee placed on record the evidence of filing of Form No. 67 on 29-12-2022. He further submitted that this Statement refers to certain download attachments‟. His contention was that the Certificate or Statement under Rule 128(8)(ii) actually accompanied Form No. 67. However, it could not be authentically proved that the relevant Certificate or Statement as per clause (ii) of sub-rule (8) of Rule 128 was also furnished along with Form No. 67 before 31-03-2023. Under these circumstances, of considered opinion that it would be in the fitness of the things if the impugned order is set-aside and the matter is restored to the file of the AO for examining whether the claim of the assessee of having furnished the Certificate or Statement as per Rule 128(8)(ii) along with Form No. 67 is correct or not? If the same is found to be correct, then the benefit of tax paid by the assessee in Kazakhstan should be allowed because all other requisite conditions have been found above to have been fully satisfied. Needless to say, the assessee will be allowed a reasonable opportunity of hearing.Appeal is allowed for statistical purposes.

Summary

Issues:
Denial of Foreign Tax Credit (FTC) to the assessee.

Analysis:
The appeal was against the denial of Foreign Tax Credit (FTC) to the assessee. The assessee, a resident of India, earned a salary from a foreign employer in Kazakhstan and claimed credit for foreign tax paid. The issue arose when the benefit of TDS was denied as the return was filed after the due date. The relevant Rule 128 of the Income-tax Act, dealing with FTC, required the assessee to furnish Form No. 67 and a Certificate or Statement before the end of the assessment year. The assessee filed the return late but submitted Form No. 67 before the deadline. However, it was unclear if the Certificate or Statement was also provided in time. The Tribunal decided to set aside the order and directed the AO to verify if the Certificate or Statement was indeed submitted along with Form No. 67. If confirmed, the benefit of tax paid in Kazakhstan should be allowed, as all other conditions were met. The assessee was granted a hearing opportunity.

The Tribunal noted the retrospective effect of the amended Rule 128(9) requiring the filing of Form No. 67 and Certificate or Statement before the end of the assessment year. While the return was filed late, Form No. 67 was submitted on time. The crucial aspect was the submission of the Certificate or Statement, which needed verification. The Tribunal emphasized the importance of meeting all conditions for claiming FTC, including timely submission of required documents. The decision to remand the matter for further examination aimed at ensuring the correct application of rules and granting relief if the necessary conditions were fulfilled.