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2024 (6) TMI 880 - AT - Income TaxDisallowance of the benefit claimed u/s 90/90A - non-allowance of the credit for the foreign tax paid in Bhutan - Form No. 67 is not filed within the required time frame - directory OR mandatory provision -HELD THAT - Respectfully following the order of Duraiswamy Kumaraswamy 2023 (11) TMI 1000 - MADRAS HIGH COURT and concurring with the views held by the coordinate Benches of the Tribunal M/s. 42 Hertz Software India Pvt. Ltd 2022 (3) TMI 834 - ITAT BANGALORE Vikash Daga 2023 (6) TMI 1387 - ITAT DELHI and Ashish Agrawal 2023 (10) TMI 86 - ITAT HYDERABAD we hold that merely because the assessee could not file Form No. 67 within the prescribed time limit as per the provisions of rule 128(9) of the Income-tax rules, 1962, as it stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of taxes paid outside India. Therefore, the claim of the assessee is allowed and the Assessing Officer is directed to give benefit of foreign tax credit in respect of tax paid outside India by the assessee in accordance with law and the DTAA between India and the Bhutan. Since in the instant case the assessee had filed Form No. 67 along with the return of income filed u/s. 139(4) of the Act, the foreign tax credit was allowable. The AO is directed to allow the credit in accordance with the provisions of section 90 read with DTAA. Appeal of the assessee is allowed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Confirmation of disallowance of foreign tax credit (FTC) claimed u/s 90/90A despite filing Form No. 67. Summary: Condonation of Delay: The appeal by the assessee was delayed by 84 days. The assessee, a senior citizen aged 75 years, cited ailments and unawareness of the appellate order as reasons for the delay. The Tribunal, noting no serious objection from the Departmental Representative (DR), condoned the delay and admitted the appeal for hearing. Disallowance of FTC: The sole issue in the appeal was the confirmation of disallowance of Rs. 4,63,266/- claimed u/s 90/90A. The assessee had filed his return on 25.03.2021, and the AO assessed it with a tax liability of Rs. 4,77,170/- u/s 143(1). The assessee's rectification petition u/s 154 was also denied. The Ld. CIT(A) dismissed the appeal due to a delay of 254 days, without addressing the merits. The Tribunal noted that the AO disallowed the FTC despite the timely filing of Form No. 67 and without providing a reasonable opportunity for being heard. The Ld. CIT(A) did not pass a reasoned order as required u/s 250(6). The Tribunal emphasized that the FTC is a vested right under Section 90 and Article 22(2) of the DTAA between India and Bhutan, and cannot be denied for procedural lapses. Legal Precedents and Provisions: The Tribunal referenced Rule 128 of the Income-tax Rules, 1962, which mandates filing Form No. 67 for FTC. However, it clarified that neither the Act nor the DTAA stipulates disallowance for non-compliance with procedural requirements. The Tribunal cited several decisions, including CIT vs. G.M. Knitting Industries (P) Ltd., which support that procedural norms do not extinguish substantive rights. Conclusion: The Tribunal concluded that filing Form No. 67 is procedural and not mandatory. Therefore, the FTC cannot be denied for the delay in filing the form. The Tribunal directed the AO to allow the FTC as per the provisions of Section 90 and the DTAA between India and Bhutan. The appeal was allowed, and the AO was instructed to grant the FTC accordingly. Order Pronounced: The appeal was allowed, and the order was pronounced in the open court on 12th June, 2024.
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