2024 (6) TMI 267 - AT - Income Tax

Denial of Foreign Tax Credit (FTC) due to late filing of Form 67 - assessee argued that the filing of Form 67 is a procedural requirement and not mandatory - HELD THAT - We are of the opinion that filing of Form 67 is a directory not mandatory and violation of procedural norm does not adversely affect the substantive rights or claims. On the basis of discussion, submissions and abovementioned binding precedents, we set aside the orders of authorities below and restore the matter to the file of Ld. AO with the direction to verify the assessee s claim in respect of foreign tax credit as per law after admitting / accepting Form 67 and decide the issue in accordance with law. Appeal of assessee is allowed.

Summary

Issues Involved:
1. Denial of Foreign Tax Credit (FTC) due to late filing of Form 67.

Summary:

1. Denial of Foreign Tax Credit (FTC) due to late filing of Form 67:
The assessee filed an appeal against the order of the Ld. CIT(A) confirming the action of the Ld. AO, who denied the foreign tax credit amounting to Rs. 10,29,861/- on the grounds that Form 67 was not filed within the due date. The assessee argued that the filing of Form 67 is a procedural requirement and not mandatory, citing various decisions from the Principal Bench, Delhi, which held that violation of procedural norms does not extinguish the substantive right of claiming FTC.

The Ld. AO disallowed the FTC for non-compliance with the procedural provision of filing Form 67 along with the ITR, issuing an intimation order u/s 143(1) and subsequent orders u/s 154, imposing a tax liability of Rs. 8,02,380/-. The Ld. CIT(A) upheld the AO's decision, emphasizing the failure to file Form 67 within the prescribed time.

The Ld. AR contended that the lower authorities did not appreciate that the filing of Form 67 is a procedural requirement and not mandatory, and that the substantive right to claim FTC should not be denied due to procedural delays. The Ld. DR supported the findings of the lower authorities.

The ITAT referred to various decisions from co-ordinate Benches, including Isha Mago vs. Asstt. Director of Income Tax, Rameshwar Prasad Shrivastava vs. ITO, Vikash Daga vs. ACIT, and Ajay Kumar Mishra vs. DCIT, which consistently held that the filing of Form 67 is a procedural requirement and not mandatory. The ITAT emphasized that procedural delays should not affect the substantive right to claim FTC, and the provisions of DTAA override the provisions of the Income Tax Act to the extent they are beneficial to the assessee.

The ITAT concluded that the filing of Form 67 is a directory requirement, not mandatory, and directed the AO to verify the assessee's claim for FTC after accepting Form 67 and decide the issue in accordance with the law. Consequently, the appeal of the assessee was allowed for statistical purposes.