2024 (4) TMI 343 - AT - Income Tax

Denial of Foreign Tax Credit (FTC) - being Form 67 was not filed along with the ITR before the time limit u/s 139 (1) but was submitted subsequent to the issue of notice u/s 250 - HELD THAT - Identical issue was considered by the ITAT Mumbai Bench in the case of Rohini Hattangadi 2023 (1) TMI 1070 - ITAT MUMBAI wherein as held that provisions of DTAA override the provisions of the Act as far as it is beneficial to the assessee. The Tribunal has held that delay in filing Form No. 67 should not by in anyway deny the claim of FTC enumerated in the DTAA and the intention of the legislation in the said case has to be construed in a manner which benefits the assessee. The A.O. is hereby directed to allow the FTC claim of the assessee and to grant refund in accordance with the law. Appeal filed by the assessee is allowed.

Summary

Issues Involved:
Denial of Foreign Tax Credit (FTC) by CPC for failure to file Form 67 u/s 139(1) of the Income-tax Act, 1961.

Judgment Summary:

Issue 1: Denial of Foreign Tax Credit (FTC) by CPC

The appeal was against the denial of Foreign Tax Credit (FTC) of Rs. 6,20,920/- by the CPC due to the non-filing of Form 67 along with the ITR within the specified time limit u/s 139(1) of the Act. The ld. CIT (A) upheld the denial citing the mandatory requirement of filing Form 67 to claim FTC. The ITAT considered a similar case from the Mumbai Bench and noted that Rule 128 specifies the mandatory filing of Form 67 before the due date of furnishing the return of income u/s 139(1). Despite a delay in filing Form 67, the Tribunal held that it should not disentitle the assessee from claiming FTC, emphasizing that procedural law should not override substantive rights. Relying on various decisions, the Tribunal directed the AO to allow the FTC claim and grant the refund, interpreting the legislation in a manner beneficial to the assessee.

Decision:
The ITAT allowed the appeal filed by the assessee, setting aside the orders of the authorities below and deciding the issue in favor of the assessee based on the precedent cited from the Mumbai Bench.

This judgment addressed the issue of denial of Foreign Tax Credit (FTC) by the CPC due to the non-filing of Form 67 within the specified time limit u/s 139(1) of the Income-tax Act, 1961. The ITAT considered the mandatory requirement of filing Form 67 as per Rule 128 of the IT Rules and the precedents emphasizing that procedural delays should not disentitle the assessee from claiming FTC. The decision highlighted the importance of interpreting legislation in a manner that benefits the assessee, ultimately allowing the appeal and directing the AO to grant the FTC claim and refund in accordance with the law.