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2024 (12) TMI 854 - AT - Income TaxDenial of foreign tax credit - form no.67 as required rule 128 of the I.T. Rules 1962 was not filed within the due date of filing of the return income for the relevant assessment year - HELD THAT - We find that similar issue came for consideration before this Tribunal in the case of Vinod Kumar Lakshmipathi 2022 (10) TMI 87 - ITAT BANGALORE wherein held that (i) 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. Thus we direct the AO to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT(A) after due verification. Appeal of the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Whether the order passed by the CIT(A) was based on surmise and conjecture and thus bad in law. 2. Non-grant of foreign tax relief due to procedural non-compliance with Rule 128 of the Income Tax Rules, 1962. Issue-wise Detailed Analysis: 1. Order Based on Surmise and Conjecture: The appellant contended that the CIT(A) erred by passing an order dated 23 February 2024, which was allegedly based on surmise and conjecture without properly appreciating the facts of the case. The appellant argued that such an order is bad in law and should be quashed. However, the judgment does not provide a detailed analysis or resolution of this issue, focusing instead on the procedural aspects related to the foreign tax relief. 2. Non-Grant of Foreign Tax Relief: The core issue in this appeal was the non-grant of foreign tax relief amounting to Rs. 3,64,686, which was claimed by the appellant in the revised return of income. The appellant, a resident of India, had income that was doubly taxed in India and Sri Lanka. The appellant argued that under Article 23(2) of the India-Sri Lanka tax treaty and Section 90 of the Income Tax Act, 1961, they were entitled to foreign tax relief. The appellant had filed Form 67 on 31 March 2021, which was after the due date for filing the return of income. The CIT(A) and CPC denied the foreign tax credit due to this delay, citing Rule 128(9) of the Income Tax Rules, 1962, which mandates the filing of Form 67 on or before the due date of filing the return of income. The Tribunal considered previous decisions, notably in the cases of Vinod Kumar Lakshmipathi and Brinda Rama Krishna, where it was held that Rule 128(9) does not provide for disallowance of foreign tax credit due to a delay in filing Form 67. The Tribunal emphasized that filing of Form 67 is a directory requirement and not mandatory. Furthermore, it was noted that the provisions of the Double Taxation Avoidance Agreement (DTAA) override the provisions of the Act, and the Rules cannot contravene the Act. The Tribunal reiterated that procedural non-compliance should not result in the denial of substantive rights, such as the foreign tax credit. The Tribunal directed the Assessing Officer (AO) to consider the Form 67 filed by the appellant and to allow the foreign tax credit after due verification. The appeal was partly allowed for statistical purposes, and the matter was remitted to the AO for reconsideration in light of the Tribunal's findings. In conclusion, the Tribunal's judgment focused on the procedural aspect of filing Form 67 and clarified that procedural delays should not negate the substantive right to foreign tax relief. The appeal was partly allowed, directing the AO to reassess the foreign tax credit claim after considering the belatedly filed Form 67.
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