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2024 (11) TMI 24 - AT - Income TaxDisallowance of foreign tax credit u/s 90 - assessee did not file return of income u/s. 139 within due date along with Form 67 - HELD THAT - Assessee is a salaried employee and employed with Tessolve Semiconductor Pvt. Ltd. and Tessolve Inc. during the year and earned income from salary, house property, capital gains, dividend and interest income. The assessee claimed foreign tax credit which was denied by the CPC. The assessee filed return of income on 28.09.2017 and due date was 05.08.2017. Form 67 was also filed belatedly on 04.04.2019. We note from the submission of the assessee, he had sufficient reason for not filing Form 67 within time. As relying on Bench of the Tribunal 2024 (3) TMI 468 - ITAT BANGALORE held that rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No. 67; (ii) filing of Form No. 67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act - we direct the AO to allow Foreign Tax Credit after due verification of Form 67 - Appeal by the assessee is allowed for statistical purposes.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Claim of Foreign Tax Credit (FTC) and the requirement of filing Form 67. Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The primary issue was whether the delay of 1809 days in filing the appeal by the assessee should be condoned. The assessee argued that the delay was due to a bona fide belief that the foreign tax credit disallowance could be rectified under section 154 of the IT Act, 1961. The assessee made attempts at rectification which were rejected without clear communication, and the period was further extended due to COVID-19 disruptions, as acknowledged by the Supreme Court of India. The assessee requested that the delay be considered from the last rectification rejection date, reducing it to 212 days. The First Appellate Authority (FAA) did not condone the delay, citing a lack of reasonable cause. However, the Tribunal found the assessee's reasons sufficient and, following the judgment of the Hon'ble Apex Court in Collector, Land Acquisition Vs. MST. Katiji and Others, condoned the delay, allowing the appeal to be heard on merits. 2. Claim of Foreign Tax Credit (FTC) and the Requirement of Filing Form 67: The second issue revolved around the denial of the FTC claim due to the late filing of Form 67. The FAA dismissed the appeal because the assessee did not file Form 67 within the due date prescribed under section 139(1), which is mandatory as per Rule 128(9). The assessee contended that the delay was due to procedural issues and argued that the requirement to file Form 67 within the due date should be considered directory, not mandatory. The Tribunal noted that similar issues had been addressed in previous cases, where it was held that the requirement of filing Form 67 is procedural and should not lead to disallowance of FTC if filed late. The Tribunal directed the Assessing Officer (AO) to verify Form 67 and allow the FTC, aligning with the judicial pronouncements that procedural requirements should not obstruct substantive rights like claiming FTC. The decision was based on the understanding that DTAA provisions override procedural rules when beneficial to the taxpayer. Conclusion: The Tribunal allowed the appeal for statistical purposes, directing the AO to verify Form 67 and grant the FTC, emphasizing that procedural lapses should not impede substantive claims, especially when the taxpayer has shown bona fide intentions and reasonable causes for delays. The judgment underscores the principle that procedural rules are meant to aid justice, not obstruct it.
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