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2024 (6) TMI 1282 - AT - Income TaxDenial of foreign tax credit (FTC) - delay in filing Form No.67 as filled after the due date of filing the return of income - HELD THAT - We note from the Form No.35 that the appeal was filed by the assessee before the CIT(A) against 143(1) of the intimation. As decided in 2022 (10) TMI 87 - ITAT BANGALORE wherein as held Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. Respectfully following the above judgment, we direct the AO to give credit for foreign tax credit as per Form No.67 filed on 22/10/2022 after due verification. Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Denial of Foreign Tax Credit (FTC) for delay in filing Form No. 67. Issue-wise Detailed Analysis: 1. Denial of Foreign Tax Credit (FTC) for Delay in Filing Form No. 67: The appeal concerns the denial of FTC claimed by the assessee due to the delayed filing of Form No. 67. The assessee filed the return of income on 26/12/2021, with the extended due date being 31/12/2021. However, Form No. 67 was filed later on 22/10/2022. The Centralized Processing Centre (CPC), Bangalore, denied the FTC while processing the return under section 143(1)(a) of the Income Tax Act on 05/07/2022. The CIT(A) upheld this denial, stating that the form was not filed within the due date of the return of income. The assessee argued that despite the delay, FTC should be granted as per the Double Taxation Avoidance Agreement (DTAA) between India and Germany, which provides relief under sections 90/90A of the Act. The assessee referenced similar cases decided by the Tribunal in favor of the taxpayer, particularly ITA No.680/Bang/2022 for the assessment year 2018-19, where the Tribunal ruled that the delay in filing Form No. 67 should not result in the denial of FTC. The Department's representative argued that the assessee did not comply with the procedural requirements laid out in Rule 128(2) and 128(9) of the Income-tax Rules, 1962, which mandate filing Form No. 67 by the due date of the return of income. Upon considering the submissions, the Tribunal noted that the CIT(A) dismissed the FTC claim solely because Form No. 67 was filed late. However, the Tribunal referenced a prior decision where it was held that Rule 128(9) does not provide for disallowance of FTC due to a delay in filing Form No. 67. It was emphasized that filing Form No. 67 is a directory, not a mandatory requirement, and that the DTAA overrides the Act and the Rules. The Tribunal cited the case of Brinda Rama Krishna (ITA No. 454/Bang/2021 for AY 2018-19) where it was held that the non-furnishing of Form No. 67 before the due date under section 139(1) is not fatal to the FTC claim. The Tribunal reiterated that procedural non-compliance should not extinguish the substantive right to claim FTC, referencing various judicial precedents and the principle that procedural requirements should aid justice, not obstruct it. The Tribunal directed the Assessing Officer (AO) to grant FTC as per Form No. 67 filed on 22/10/2022 after due verification, following the precedent set in similar cases. Conclusion: The appeal was allowed for statistical purposes, with the Tribunal directing the AO to verify and grant the FTC as claimed by the assessee, despite the delayed filing of Form No. 67. This decision aligns with the Tribunal's consistent stance that procedural delays should not negate substantive tax reliefs provided under DTAA and the Income Tax Act. The order was pronounced on 17th April 2024.
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