2024 (2) TMI 838 - AT - Income Tax

Foreign Tax Credit u/s 90 - FTC denied as assessee has filed the From No. 67 beyond the due date u/sec 139(1) - mandatory v/s directory obligation - HELD THAT - As there is no amendment on these aspects in the Section 90 of the Act and the rules cannot override the Act and therefore the filing of Form. No. 67 is not mandatory but it is directory. Accordingly, we restore the disputed issue for limited purpose to the file of the assessing officer to grant Foreign Tax Credit after verification and in accordance with the law - Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Denial of Foreign Tax Credit (FTC) u/s 90 of the Income Tax Act, 1961.

Condonation of Delay:

At the time of hearing, the Ld. AR of the assessee submitted that there is a delay in filing the appeal before the Hon'ble Tribunal and the assessee has filed an application for condonation of delay. Whereas, the facts mentioned in the application are reasonable and the Ld. DR has no specific objections. Accordingly, we condone the delay and admit the appeal.

Denial of Foreign Tax Credit (FTC) u/s 90:

The assessee, engaged in consultancy services, filed a return of income for the A.Y. 2018-19 disclosing a total income of Rs. 86,05,760/-. The assessee included Rs. 11,93,709/- as net rental income from house property in the United Kingdom and claimed FTC of Rs. 83,445/- paid in the UK u/s 90 of the Act as per the Double Taxation Avoidance Agreement (DTAA) with the UK. However, the FTC was not granted in the assessment processed u/s 143(1) of the Act.

Aggrieved by the denial, the assessee appealed to the CIT(A), who dismissed the appeal on the grounds that Form No. 67 was not filed before the due date u/s 139(1) of the Act. The CIT(A) upheld the AO's decision, considering the filing of Form No. 67 as a mandatory requirement.

At the Tribunal, the Ld. AR argued that the CIT(A) erred in confirming the AO's action, emphasizing that the DTAA should take precedence over domestic laws and that the filing of Form No. 67 is directory, not mandatory. The Ld. DR maintained that the requirement is mandatory as per Rule 128(9).

The Tribunal examined various judicial decisions, including those from the ITAT Bangalore, ITAT Mumbai, and the Hon'ble High Court of Madras, which held that the filing of Form No. 67 is directory and not mandatory. The Tribunal concluded that the rules cannot override the Act and restored the issue to the AO for verification and granting of FTC in accordance with the law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order Pronounced in Open Court on 15.02.2024