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TMI Blog2022 (10) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order u/s. 143(1) of the Incometax Act,1961 ['the Act' for short] passed by the AO, CPC Bengaluru in disallowing the Foreign Tax Credit of Rs.28,431/- u/s. 90/90A of the Act and raising a demand of Rs. 38,540/- for A.Y. 2018-19. 2.1 In the present appeal, it is seen that the assessee has filed his return of income for A.Y. 2018-19 on 22/09/2018 which is filed after the extended due date of filing the return of income for A.Y. 2018-19 i.e. 31/08/2018 and Form 67 on 22/09/2018, a copy of which has been furnished by the assessee during the course of appellate proceedings. Hence, the AO, CPC while passing the intimation order disallowed the Foreign Tax Credit claimed by the assessee u/s. 90/90A of the Act. 2.2 One of the requirements of Rule 128 for claiming FTC is provided by Rule 128(8) & (9) of the I.T. Rules and the same reads as under:- "(8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee namely.- (i) a statement of income from the country or specified territory outside India offered for tax for the previous year and of foreign tax deducted or paid on such income in Form No.67 and verified in the manner s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the foreign income of Rs.2,01,024/- and also paid tax on it at Rs.63,342/- and levying of additional tax of Rs.28,431/- is amounting to double taxation. In our opinion, the plea of the assessee is justified. The assessee has filed the copy of Form No.67 before Ld. CIT(A). He ought to have given direction to give credit for foreign tax which has been paid as per Form 67. 5. Further, we note that on identical issue, This Tribunal in the case of Brinda Rama Krishna (in ITA No. 454/Bang/2021 for AY.2018-19), order dated 17.11.2021 held that (i) 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. Therefore, nonfurnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. The findings of this Tribunal are reproduced below: "2. The Assessee is an individual and during the previous year relevant to AY 2018- 19 an ordinary resident in India. The Assessee worked with Ernst & Young Australia from 20.11.2017 till 16.05.2019. Since her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified for furnishing the return of income under subsection (1) of section 139, in the manner specified for furnishing such return of income." 4. The Assessee claimed FTC of Rs. 4,73,779/- u/s. 90 of the Act read with Article 24 of India Australia tax treaty ("DTAA") in a revised return of income filed on 31.8.2018. The Assessee had not filed the Form 67 before filing the return of income. On realising the same, the Assessee filed Form 67 in support of claim of foreign tax credit on 18.04.2020. The revised return of income was processed by Centralized Processing Centre (CPC) electronically and intimation u/s 143(1) of the Act on 28.05.2020 was passed disallowing the claim of FTC. 5. The Assessee filed a rectification application before the AO on 15.06.2020 & 25.02.2021 and submitted that credit for FTC as claimed in the return should be given. In the rectification order dated 10.03.2021, the AO upheld the action on the ground that the Assessee has failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) of the Rules. 6. On appeal by the Assessee, the CIT(A) vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters:- ............... (ha) the procedure for granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act;" 9. It was submitted that the Board has power to prescribe procedure to granting FTC. However, the Board does not have power to prescribe a condition or provide for disallowance of FTC. The procedure prescribed in Rule 128 should therefore be interpreted in this context. Rule 128 is therefore a procedural provision and not a mandatory provision. 10. It was further submitted that Rule 128(9) 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) of the Act. However, the 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 u/s 90 of the Act would be denied. The learned counsel for the Assessee submitted that in case the intention was to deny t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectory and not mandatory. Reliance in this regard was placed on the following cases: * CIT vs Axis Computers (India) (P.) Ltd [2009] 178 Taxman 143 (Delhi) * PCIT, Kanpur vs Surya Merchants Ltd [2016] 72 taxmann.com 16 (Allahabad) * CIT, Central Circle vs American Data Solutions India (P.) Ltd [2014] 45 taxmann.com 379 (Karnataka) * CIT-II vs Mantec Consultants (P.) Ltd [2009] 178 Taxman 429 (Delhi) * CIT vs ACE Multitaxes Systems (P.) Ltd [2009] 317 ITR 207 (Karnataka). 13. It was submitted that as per the provisions of section 90(2) of the Act, where the Central Government of India has entered into a DTAA, the provisions of the Act would apply to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. Reliance in this regard is placed on the following cases and circulars: Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) CIT v Eli Lily & Co (India) P Ltd (2009) 178 Taxman 505 (SC) GE India Technology Centre P Ltd v CIT (2010) 193 Taxman 234 (SC) Engineering Analysis Centre of Excellence P Ltd v CIT (2021) 125 taxmann.c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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