2024 (6) TMI 268 - AT - Income Tax

Denial of Foreign Tax Credit (FTC) due to late filing of Form 67 - procedural or mandatory requirement - HELD THAT - In the present case, return of income for AY 2021-22 has been filed on 13.10.2021 and intimation order U/s 143(1) of the Act was passed on 05.07.2022 by Ld. AO for the AY 2021-22 and Form 67 filed by and appellant before Ld. AO dated 25.01.2022 and rectified return of income has been filed on 04.09.2022 by the assessee / appellant for AY 2021-22. We are of the considered opinion that filing of Form 67 is more procedural and directing in nature, not mandatory and violation of directing procedural norms does not adversely effect the substantive right to claim. So grounds raised by the assessee / appellant accordingly allowed.

Summary

Issues Involved:
1. Rejection of application u/s 154 by CIT(A).
2. Denial of Foreign Tax Credit (FTC) due to late filing of Form 67.

Summary:

Issue 1: Rejection of application u/s 154 by CIT(A)
The assessee filed an application for rectification u/s 154 of the Income Tax Act, 1961, which was rejected by the CIT(A). The CIT(A) held that the appellant was required to file Form 67 before the due date specified for furnishing the return of income u/s 139(1). Since Form 67 was filed after the due date, the appellant was deemed ineligible for relief u/s 90 of the Act. The CIT(A) confirmed the order of the AO and dismissed the appeal, stating that the appellant could not provide any contrary evidence against the order u/s 154.

Issue 2: Denial of Foreign Tax Credit (FTC) due to late filing of Form 67
The assessee argued that the CIT(A) erred in rejecting the application u/s 154 without basis and in violation of principles of natural justice. The assessee contended that the relief of Rs. 4,27,677/- claimed u/s 90/91 should have been allowed, and the demand of Rs. 4,74,780/- should have been deleted. The assessee cited various judicial precedents to support the argument that filing Form 67 is procedural and directory, not mandatory. The cited cases, including Duraiswamy Kumaraswamy vs. PCIT, Gaurave Singh vs. ITO, and others, emphasized that the requirement to file Form 67 is directory and not filing it within the due date does not extinguish the substantive right to claim FTC.

The Tribunal, after considering the submissions and judicial precedents, concluded that filing Form 67 is procedural and directory, not mandatory. The Tribunal held that violation of procedural norms does not adversely affect the substantive right to claim FTC. Consequently, the grounds raised by the assessee were allowed, and the appeal was decided in favor of the assessee.

Order:
The appeal was allowed, and the order was pronounced in the Open Court on 31.05.2024.