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2024 (6) TMI 1282 - AT - Income TaxIssues Involved: 1. Denial of Foreign Tax Credit (FTC) due to delay in filing Form No. 67. Detailed Analysis: Denial of Foreign Tax Credit (FTC) Due to Delay in Filing Form No. 67: The assessee filed an appeal against the order passed by the Addl.CIT(A)-11, Mumbai, which denied the Foreign Tax Credit (FTC) claimed by the assessee. The denial was based on the delay in filing Form No. 67. The return of income was filed on 26/12/2021, with an extended due date of 31/12/2021. However, Form No. 67 was filed on 22/10/2022, after the due date. Consequently, while processing the return u/s 143(1)(a) on 05/07/2022, the FTC was denied by the CPC, Bangalore. The assessee's income included a salary of Rs. 16,52,452/- and income from other sources amounting to Rs. 22,20,101/-, resulting in a gross total income of Rs. 38,72,553/-. After claiming deductions under Chapter VIA of Rs. 2,67,364/-, the taxable income was determined at Rs. 36,05,190/-. The CIT(A) dismissed the appeal, stating that the assessee did not file Form 67 within the due date of filing the return of income. The assessee argued that the income earned in Germany was eligible for relief under the Double Taxation Avoidance Agreement (DTAA) as per Section 90/90A of the Income-tax Act. The assessee relied on similar cases decided by the co-ordinate Bench of the Tribunal, including ITA No. 680/Bang/2022 for the assessment year 2018-19, where the Tribunal ruled in favor of the assessee. The Department's representative argued that the assessee did not comply with Rule 128(2) and 128(9) of the Income-tax Rules, 1962, which mandate filing Form 67 within the due date of filing the return of income. Upon considering the rival submissions, the Tribunal noted that the CIT(A) did not accept the FTC claimed by the assessee due to the late filing of Form 67. However, the Tribunal referred to earlier judgments where it was held that Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. It was emphasized that filing Form No. 67 is a directory requirement, not a mandatory one, and that DTAA provisions override the Income-tax Act and Rules. The Tribunal cited the case of Brinda Rama Krishna, where it was held that non-furnishing of Form No. 67 before the due date u/s 139(1) is not fatal to the claim for FTC. The Tribunal also highlighted that procedural requirements should not extinguish the substantive right of claiming FTC. In conclusion, the Tribunal directed the Assessing Officer (AO) to give credit for the foreign tax as per Form 67 filed on 22/10/2022 after due verification. Thus, the appeal of the assessee was allowed for statistical purposes. Conclusion: The Tribunal ruled that the delay in filing Form No. 67 should not result in the denial of FTC. It directed the AO to give credit for the foreign tax paid, following the principles laid out in earlier judgments and considering the DTAA provisions. The appeal was allowed for statistical purposes, emphasizing the directory nature of filing Form 67 and the overriding effect of DTAA provisions.
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