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2024 (9) TMI 581 - AT - Income TaxDenial of relief claimed u/s. 90/90A - foreign tax credit (FTC) denied - non grant of credit of TDS as that there was a delay in filing of Form No.67 for claiming relief as per the DTAA between the Government of India and USA - mandatory V/S directory requirement - as argued since assessee had paid taxes on the said income in USA, the assessee cannot be taxed twice on the said amount and credit of taxes paid/withheld in the overseas jurisdiction i.e USA should be granted to the assessee - HELD THAT - We are of the considered view, that the assessee has duly filed form No.67 giving particulars of taxes withheld by the US based employer, albeit with a minor delay but the same was duly filed by the assessee before the return of income of assessee was processed by the CPC u/s. 143(1) of the Act on 24.12.2021. The contents/details furnished by the assessee in form No.67 have not been disputed/challenged by the Department at any stage of proceedings. In case of Manoj Kaushikprasad Jingar 2023 (8) TMI 382 - ITAT AHMEDABAD ITAT held that late filing of form no.67 cannot deny entitlement to the assessee to tax benefit when the salary earned is from Tanzania and there is a tax treaty between India and Tanzania. The assessee cannot be taxed twice on the same income and therefore the Ld.CIT(A), cannot deny the claim of the assessee. In the case of Sanjeev Agarwal 2023 (5) TMI 1287 - ITAT JAIPUR ITAT held that Foreign Tax Credit could not be denied for delay in filing Form No. 67 as filing of Form No. 67 is not mandatory but a directory requirement. In the case of 42 Hertz Software India (P.) Ltd. 2022 (3) TMI 834 - ITAT BANGALORE ITAT held that where for claiming foreign tax credit (FTC), assessee failed to furnish Form67 on or before due date of furnishing return of income prescribed under section 139(1) but submitted same subsequently during assessment proceedings, assessee was entitled to claim Foreign Tax Credit for taxes paid. Decided in favour of assessee.
Issues Involved:
1. Denial of Foreign Tax Credit (FTC) due to late filing of Form No. 67. 2. Procedural requirements versus substantive rights in claiming FTC. 3. Relevance of judicial precedents in similar cases. Issue-Wise Detailed Analysis: 1. Denial of Foreign Tax Credit (FTC) due to late filing of Form No. 67: The primary issue revolves around the denial of FTC for taxes paid in the USA on the grounds that Form No. 67 was not filed within the time limit specified under Section 139(1) of the Income Tax Act. The Assessee had earned income from the USA and paid taxes there, which was declared in the return of income. However, the Centralized Processing Center (CPC) denied the FTC claim due to the delayed submission of Form No. 67, which was filed on 10.03.2021, after the due date but before the return was processed on 24.12.2021. 2. Procedural requirements versus substantive rights in claiming FTC: The Assessee argued that the filing of Form No. 67 is a procedural requirement and should not negate the substantive right to claim FTC. The Ld. CIT(A) held that filing Form No. 67 before the due date is mandatory as per Rule 128 of the Income Tax Rules, 1962, which uses the word "Shall," implying a mandatory requirement. The Assessee contended that the procedural delay should not override the substantive right to avoid double taxation. 3. Relevance of judicial precedents in similar cases: The Assessee cited several judicial precedents where the late filing of Form No. 67 did not bar the claim for FTC. Notably, the ITAT in the case of Manoj Kaushikprasad Jingar vs. The Assessing Officer, CPC, Bangalore, and Sanjeev Agarwal 152 taxmann.com 67 (Jaipur - Trib.) held that the late filing of Form No. 67 is a procedural lapse and should not deny the substantive right to claim FTC. The ITAT in these cases emphasized that procedural requirements should not override substantive rights, especially when the details provided are not disputed. Conclusion: The Tribunal, after considering the rival contentions and judicial precedents, concluded that the Assessee's delay in filing Form No. 67 should not result in the denial of FTC. The Tribunal observed that the Department did not dispute the veracity of the details provided in Form No. 67 and that the Assessee had duly declared the overseas income and taxes paid. Citing various judicial precedents, the Tribunal held that procedural delays should not negate substantive rights. Therefore, the appeal filed by the Assessee was allowed, and the FTC claim was granted. Pronouncement: The order was pronounced in Open Court on 10/09/2024.
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