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2023 (11) TMI 1189 - AT - Income TaxForeign tax credits u/s 90/90A - claim rejected as not claimed in the original return of income - assessee has filed Form 67 for claiming relief - Assessee argued even the filling the revised ITR time was not available to the assessee when the assessee got the information for the foreign tax credit to be claimed on the same income offered in the Indian tax return, so moved the rectification application which was rejected even though the assessee filed the form no.67 to claim the credit on the ground that the claim is not in the ITR filed - HELD THAT - Considering the claim of the assessee a fresh is decided in the judgment of the co-ordinate bench in the case M/s. Rajasthan State Seeds and Organic Production certificate Agency 2016 (3) TMI 1469 - ITAT JAIPUR CIT(A) being an appellate authority ought to have considered the assessee's claim which was purely legal in nature and the reservation as contemplated by in the Goetze India Ltd. vs. CIT 2006 (3) TMI 75 - SUPREME COURT is applicable to AO and not to the appellate authority. We are of the view that assessee's claim should have been considered and appropriate relief in accordance with law may be provided. In view thereof, we set aside the matter to the file of the Id. AO to consider the assessee's claim afresh by providing adequate opportunity of being heard. Also decided in Juan Miguel Guerrero Ferrer 2023 (9) TMI 1401 - ITAT JAIPUR as held neither section 90 nor DTAA provides that FTC shall be disallowed for non compliance with any procedural requirements. Since FTC is assessee s vested right as per Article 22(2) of the DTAA read with section 90 and thus same cannot be disallowed for non compliance of procedural requirement that is prescribed in the Rules. Rule 128 is a procedural provision and not a mandatory provision - it provides that Form 67 should be filed on or before the due date of filing the return of income as prescribed u/s 139(1) - said Rule nowhere provides that if the said Form 67 is not filed within the above stated time frame, the relief as sought by the assessee under section 90 of the Act would be denied. In case the intention of the Act or Rule was to deny the FTC, then in that eventuality either the Act or the Rules would have specifically provided that the FTC would be disallowed if the assessee does not file Form 67 within the due date prescribed u/s 139(1) - Thus filing of Form 67, in our view, is a procedural/directory requirement and is not a mandatory requirement. Decided in favour of assessee.
Issues Involved:
1. Disallowance of Foreign Tax Credits under section 90/90A. 2. Procedural compliance and its impact on the claim for Foreign Tax Credits. 3. Jurisdiction and powers of CIT(A) in relaxing time limitations under section 139. 4. Rectification of mistakes under section 154. Summary: 1. Disallowance of Foreign Tax Credits under section 90/90A: The assessee filed an appeal against the order of CIT(A) dated 16-06-2023, challenging the disallowance of Foreign Tax Credits (FTC) under section 90/90A. The CIT(A) dismissed the appeal, stating that the withholding tax in Singapore was known to the appellant before filing the income tax return. The tax was not withheld on salary by the employer for the period January 2020 to March 2020 and was assessed at the time of filing the Singapore Income tax return on 14th June 2021. 2. Procedural compliance and its impact on the claim for Foreign Tax Credits: The CIT(A) dismissed the appeal on procedural grounds, noting that the FTC was not claimed in the original return of income. The assessee had filed Form 67 on 30th December 2020, declaring the entire salary income from November 2019 to March 2020 but could not claim the FTC for January 2020 to March 2020 due to the nonavailability of tax proofs at the time of filing. The revised Form 67 was filed on 18th May 2022, but the time to file a revised Indian Income Tax Return had expired on 31 March 2021. 3. Jurisdiction and powers of CIT(A) in relaxing time limitations under section 139: The CIT(A) noted that the appeal was against the order under section 154, and there was no mistake in the rectification order. The CIT(A) emphasized that the DTAA does not allow claims beyond the time allowed under section 139, and the CIT(A) does not have the power to relax such time limitations under section 119 of the Act. 4. Rectification of mistakes under section 154: The CIT(A) upheld the rectification order under section 154, stating that the new claim with additional evidence could not be entertained during rectification proceedings. The CIT(A) confirmed that there was no mistake on record, and the relief claimed was not part of the original return of income. Tribunal's Decision: The Tribunal considered the peculiar facts of the case, noting that the assessee filed Form 67 on 30.09.2020 and there was no dispute about the eligibility for FTC. The Tribunal referenced the decision in M/s. Rajasthan State Seeds and Organic Production Certificate Agency Vs. DCIT and other similar cases, concluding that procedural non-compliance should not extinguish the substantive right to claim FTC. The Tribunal directed the AO to allow the FTC relief, setting aside the order of the CIT(A). Conclusion: The appeal of the assessee was allowed, and the AO was directed to provide relief for the Foreign Tax Credits. The Tribunal emphasized that procedural requirements should not override substantive rights, especially when there is no dispute about the eligibility for the credits. The decision was pronounced in the open court on 31/10/2023.
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