2022 (6) TMI 693 - AT - Income Tax

Foreign tax credit - Claim denied for non-filing of From 67 before the due date of filing of the return U/s. 139(1) - HELD THAT - We find that the Form 67 was not filed by the tax consultant of the assessee due to oversight and pleaded that mistake may be considered as technical mistake and there was a reasonable cause. We find no merit in the submissions made by the assessee s representative that the above reason mentioned by the assessee in its written submissions is reasonable. The assessee has realized the filing of Form 67 only after the scrutiny proceedings were initiated by the AO. We also note that Form 67 has been filed with a delay of more than two years without any valid and reasonable cause. From the plain reading of Rule 128(9) of the IT Rules, it is clear that the statement in Form-67 shall be furnished on or before the due date specified for furnishing the return of income under sub-section(1) of section 139 of the Act. Therefore, we are of the considered view that since the word shall has been used in the Rule 128(9) that it is mandatory in nature and not directory as claimed by the Ld. AR. We therefore find no infirmity in the order of the Ld. CIT(A), NFAC and hence no interference is required. - Decided against assessee.

Summary

Issues:
Non-filing of Form 67 leading to the denial of foreign tax credit under Rule 128(9) of the IT Rules.

Analysis:
The appeal was filed by the assessee against the order of the Ld. CIT(A), NFAC, Delhi for the Assessment Year 2018-19. The assessee, a salaried employee, claimed foreign tax credit of Rs. 37,63,898/- but failed to file Form-67 as required by U/s. 128(9) of the IT Rules, 1961. The AO disallowed the foreign tax credit due to non-filing of Form 67 before the due date of filing the return U/s. 139(1) of the Act. The Ld. CIT(A), NFAC upheld the AO's order, leading to the current appeal before the ITAT.

The assessee raised various grounds of appeal challenging the order of the Ld. CIT(A), NFAC. The main contention was that the delay in filing Form 67 should not lead to the denial of foreign tax credit, as claimed by the assessee. The Ld. AR argued that filing Form 67 is directory, not mandatory, citing a Bangalore Tribunal case. The Ld. DR, on the other hand, supported the Revenue Authorities, emphasizing the mandatory nature of Form 67 for claiming foreign tax credit.

After considering the arguments and authorities' orders, the ITAT found that the Form 67 was not filed due to an oversight by the assessee's tax consultant, with no valid or reasonable cause for the delay of more than two years. Referring to Rule 128(9) of the IT Rules, the ITAT concluded that the requirement to furnish Form 67 before the due date specified for filing the return of income is mandatory, not directory. Therefore, the ITAT upheld the order of the Ld. CIT(A), NFAC, dismissing the appeal filed by the assessee.

In conclusion, the ITAT's judgment emphasized the mandatory nature of filing Form 67 for claiming foreign tax credit under Rule 128(9) of the IT Rules, leading to the dismissal of the appeal due to the assessee's failure to comply with the statutory requirement within the specified timeframe.