2023 (6) TMI 282 - AT - Income Tax

Foreign Tax Credit (FTC) - claim denied due to delay in filing of Form No.67 beyond the prescribed time limit u/s 139(1) - assessee had filed his US Income Return and paid the taxes accordingly. While filing the Indian Income Tax Return, the assessee disclosed the above aforementioned foreign income and claimed Foreign Tax Credit which was paid in USA - HELD THAT - We find an identical issue had come in the case of Baburao Atluri 2022 (12) TMI 525 - ITAT HYDERABAD while deciding the issue in favour of the assessee held requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67. Since the facts of the instant case are identical to the facts of the case already decided by the Tribunal cited (Supra), respectfully following the said decision, we direct the AO to allow the FTC after due verification. Appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Denial of Foreign Tax Credit (FTC) due to delay in filing Form No.67.

Summary:

Condonation of delay in filing the appeal:
The appeal filed by the assessee was directed against the order dated 16/12/2022 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2021-22. The assessee explained the reasons for the delay of 57 days in filing the appeal and requested the Bench to consider the date of filing as 15.2.2023. After considering the contents of the condonation petition along with the affidavit, the delay was condoned and the appeal was admitted for adjudication.

Denial of Foreign Tax Credit (FTC) due to delay in filing Form No.67:
The assessee, an individual, filed the return of income for A.Y 2021-22, disclosing foreign income and claiming FTC which was paid in the USA. The CPC Bengaluru did not consider the FTC while processing the ITR, leading to the appeal before the CIT (A). The CIT (A)NFAC dismissed the appeal, stating non-compliance with mandatory conditions in Rule 128 of the IT Rules and the delay in submission of Form 67 was not condoned. The assessee appealed before the Tribunal, citing precedents where FTC was allowed despite delays. The Tribunal observed that filing Form 67 is directory, not mandatory, and allowed the FTC after due verification, following previous decisions. The appeal was allowed, directing the AO to allow the FTC after verification.

In conclusion, the appeal filed by the assessee was allowed by the Tribunal, emphasizing the directory nature of filing Form 67 for claiming Foreign Tax Credit. The decision was based on precedents and the specific circumstances of the case, where the delay was deemed reasonable.