2024 (5) TMI 1456 - AT - Income Tax

Denial of Foreign Tax Credit (FTC) - assessee did not file form No. 67 within the stipulated time of filing the return of income u/s 139(1) - HELD THAT - We find the Hyderabad Bench of Tribunal in the case of Baburao Atluri 2022 (12) TMI 525 - ITAT HYDERABAD has allowed the FTC despite delay in filing the FTC certificate in form No. 67 by observing that 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 In this case since the certificate was not examined by the Assessing Officer, therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of Assessing Officer with the direction to verify the form No. 67 and allow consequential FTC. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.

Summary

Issues involved:
Challenging the order allowing Foreign Tax Credit (FTC) due to delay in filing Form No. 67 before the due date of filing as per Rule 128(9) of the Income Tax Rules, 1962.

Detailed Analysis:
1. The appeal filed by the Revenue challenged the order of CIT(A) / National Faceless Appeal Centre (NFAC) allowing FTC even though Form No. 67 was not filed before the due date of filing the return of income. The assessee, a Resident of India and USA, claimed FTC of Rs. 4,32,10,256/- under the India-USA Double Tax Avoidance Agreement. The initial form filed mentioned the wrong assessment year, rectified later. The CPC rejected the FTC claim, leading to the appeal.
2. The Revenue argued that the delay in filing Form No. 67 should disallow the FTC claim. However, the assessee cited cases where belated filing was allowed, emphasizing the directory nature of Form No. 67 filing.
3. The Tribunal analyzed the CBDT's Notification No. 9, stating Form No. 67 should precede the return filing. Despite the delay, the Ld. CIT(A) / NFAC directed the Assessing Officer to allow the FTC, citing reasons already mentioned.
4. Referring to the Hyderabad Bench and Bangalore Bench decisions, the Tribunal held that the filing of Form No. 67 is directory, not mandatory. The delay in filing was justified due to non-receipt of tax documents from the foreign deductor, different tax jurisdiction timelines, and following the view favorable to the assessee.
5. Considering various decisions and the unexamined certificate by the Assessing Officer, the Tribunal remanded the issue for verification and directed to allow the FTC. The appeal by the Revenue was allowed for statistical purposes, restoring the issue to the Assessing Officer for verification and consequential FTC allowance.