2024 (12) TMI 693 - AT - Income Tax

Denial of foreign tax credit - delay filling form number 67 for claiming FTC for the tax deducted at source on the salary received from SBI, Germany - HELD THAT -Taking note of the fact that the said delay was on account of technical difficulties faced by the tax payers for filing Form 67 on the Income Tax portal. Even otherwise, case of the assessee is squarely covered by the decision of this Tribunal in the case of Vineet Bahety 2024 (2) TMI 1483 - ITAT KOLKATA wherein held it is not the case of violation of any of the provisions of the act but of the rule which does not provide for any consequence if not complied with. Therefore respectfully following the decisions of the coordinate bench on this issue we hold the assessee is eligible for foreign tax credit as she has filed form number 67 before completion of the assessment though not in accordance with rule 128 (9) of The Income Tax Rules which provided that such form shall be filed on or before the due date of filing of the return of income. Thus we hold that the assessee is eligible for foreign tax credit as he has filed a valid form number 67 for claiming FTC for the tax deducted at source on the salary received from SBI, Germany. Accordingly grounds of appeal raised by the assessee are allowed.

Issues:
Appeal against order passed u/s 250 of the Income Tax Act, 1961 by Ld. Commissioner of Income-tax, (Appeals) arising out of the rectification order framed u/s. 154 of the Act. Non-granting of Foreign Tax Credit (FTC) due to delay in furnishing Form 67. Upholding of enhancement of interest u/s 234B and 234C. Denial of proper opportunity of being heard to the Appellant.

Analysis:

Issue 1: Appeal against order passed u/s 250 of the Income Tax Act
The appellant filed an appeal against the order passed by the Ld. Commissioner of Income-tax, (Appeals) pertaining to the Assessment Year 2019-20. The appeal challenged the rectification order framed by ADIT, CPC, Bengaluru. The grounds of appeal raised by the assessee included issues related to the denial of Foreign Tax Credit (FTC) and the enhancement of interest under sections 234B and 234C.

Issue 2: Non-granting of Foreign Tax Credit (FTC)
The appellant, a resident individual working for State Bank of India in Germany, claimed FTC of Rs. 3,49,286 in the income tax return. However, the FTC was not granted initially due to a delay in furnishing Form 67, which was filed after the due date specified under section 139(1) of the Income Tax Act. The Tribunal referred to previous decisions where it was held that the filing of Form 67 is directive, not mandatory, and a delay in filing should not result in denial of FTC. The Tribunal allowed the appeal, stating that the delay in filing Form 67 was due to technical difficulties faced by taxpayers and that the appellant was entitled to the claimed FTC.

Issue 3: Enhancement of interest u/s 234B and 234C
The appellant contended that the enhancement of interest under sections 234B and 234C was erroneous since granting the foreign tax credit would eliminate the demand. The Tribunal, after considering the submissions, held that once the appellant was entitled to the FTC, there would be no demand, thereby allowing the appeal on this ground as well.

Issue 4: Denial of proper opportunity of being heard
The appellant raised concerns regarding the denial of a proper, sufficient, and adequate opportunity of being heard during the appellate proceedings. However, the Tribunal did not delve deeply into this issue in the judgment, as the primary focus was on the grant of FTC and the enhancement of interest under sections 234B and 234C.

In conclusion, the Tribunal allowed the appeal of the assessee, granting the Foreign Tax Credit and setting aside the enhancement of interest under sections 234B and 234C. The judgment emphasized the importance of considering the nature of Form 67 filing requirements and upheld the appellant's right to claim the FTC despite a delay in filing due to technical difficulties.

← Previous Next →