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2024 (12) TMI 638 - AT - Income TaxDenial of Foreign Tax Credit (FTC) - assessee filed belated Form No. 67 - procedural/directory requirement v/s mandatory requirement - HELD THAT - Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(a) does not preclude the assessee from claiming credit for FTC in case of delay in filing the required form no 67 as the credit for FTC is a vested right of the assessee and since form 67 was filed as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC. See Sukhdev Sen 2024 (4) TMI 1208 - ITAT KOLKATA Thus, the claim for FTC is directed to be allowed as the assessee had filed the required form no.67 as evidence of foreign taxes paid and the Ld. AO is directed to allow the FTC in accordance with DTAA between India Thailand and as per law. Appeal of the assessee is allowed.
Issues Involved:
1. Procedural Requirements for Foreign Tax Credit (FTC) Claim. 2. Double Taxation Avoidance Agreement (DTAA) vs. Income Tax Act. 3. Judicial Hierarchy and Precedents. 4. Principles of Natural Justice. 5. Re-computation of Interest under Sections 234B and 234C. Issue-wise Detailed Analysis: 1. Procedural Requirements for Foreign Tax Credit (FTC) Claim: The primary issue was whether the non-filing of Form 67 before the due date of filing the return of income disallows the claim for FTC. The assessee contended that the Central Board of Direct Taxes (CBDT) Notification No. 9 dated 19 September 2017, which mandates the filing of Form No. 67 for claiming FTC, is procedural and not substantive. The Tribunal found that Rule 128(9) does not explicitly provide for disallowance of FTC if Form No. 67 is filed late. It was concluded that filing Form No. 67 is a procedural requirement and not mandatory, and thus, the delay in filing should not extinguish the substantive right to claim FTC. 2. Double Taxation Avoidance Agreement (DTAA) vs. Income Tax Act: The assessee argued that the DTAA provisions override the Income Tax Act, as upheld by various judicial precedents, including the Supreme Court's decision in Engineering Analysis Centre of Excellence (P.) Ltd. The Tribunal agreed, reiterating that the DTAA provisions should prevail when they are more beneficial to the assessee. Article 23 of the India-Thailand DTAA was referenced, emphasizing that FTC should be allowed as per the DTAA, which supersedes the procedural requirements of the Income Tax Act. 3. Judicial Hierarchy and Precedents: The assessee cited the jurisdictional ITAT Bench-B Kolkata decision in Sukhdev Sen Vs. ACIT, which supported the view that procedural delays in filing Form No. 67 should not preclude FTC claims. The Tribunal concurred with this precedent, reinforcing the principle that procedural requirements should not override substantive rights when judicial precedents support the assessee's position. 4. Principles of Natural Justice: The assessee argued that the Assessing Officer (AO) and CIT(A) did not adhere to the principles of natural justice by rejecting the rectification application without providing an opportunity to be heard. The Tribunal noted that the procedural lapse in not filing Form No. 67 on time should not result in the denial of FTC, as it would contradict the principles of natural justice and fairness. 5. Re-computation of Interest under Sections 234B and 234C: The assessee challenged the re-computation of interest under Sections 234B and 234C, arguing that the denial of FTC affected the interest calculation. The Tribunal found that the denial of FTC was unjustified and directed the AO to allow the FTC, which would consequently affect the interest computation under these sections. Conclusion: The Tribunal allowed the appeal, directing the AO to grant the FTC as per the DTAA between India and Thailand, and in accordance with the law. The Tribunal emphasized that procedural delays should not negate the substantive rights provided under the DTAA and the Income Tax Act. The decision underscored the importance of adhering to judicial precedents and the principles of natural justice in tax assessments.
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