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TMI Blog2023 (6) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... ome has been earned in India or outside India. To the extent of salary earned outside India which assessee had offered to tax in India, the assessee would be entitled to the claim of FTC on the same. Therefore, we restore the matter to the file of the AO for denovo consideration - Appeal filed by the assessee is allowed for statistical purposes. - ITA No.312/Bang/2023 - - - Dated:- 6-6-2023 - Shri Chandra Poojari, Accountant Member And Shri George George K, Judicial Member For the Assessee : Shri. Sarwan Kumar, CA For the Revenue : Shri. Sankar Ganesh, Addl. CIT(DR)(ITAT), Bengaluru ORDER PER GEORGE GEORGE K, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against order of CIT(A), dated 22.03.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called the Act ). The relevant Assessment Year is 2021-22. 2. Assessee has raised 2 grounds and various sub-grounds. All the grounds relate to the issue of denial of claim of Foreign Tax Credit (FTC) amounting to Rs. 9,47,077/-. 3. Brief facts of the case are as follows: Assessee is a Japanese national. For the relevant Assessment Year, assessee was deputed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Order dated 27.04.2023) 6. The learned DR supported the order of the CIT(A). 7. We have heard the rival submission and perused the material on record. In the instant case, Form No.67 as mandated under Rule 128 of the Income Tax Rules, 1962, has been filed well within the time prescribed for filing the return under section 139(1) of the Act. The extended due date for filing return of income for Assessment Year was 31.12.2021. Form No.67 has been filed on 13.12.2021. However, the return has been filed on 10.01.2022. Therefore, there is a delay of 10 days in filing the return of income. The Bangalore Bench of the Tribunal in the case of Sanjiv Gopal Vs. ACIT (supra) was considering a case where both return and Form No.67 was filed belatedly. The Bangalore Bench of the Tribunal considered various orders of the Tribunal and decided the issue in favour of the assessee. The Bangalore Bench of the Tribunal held that Rule 128 is only a procedural provision and not a mandatory provision and cannot override the provisions of the Act or the DTAA. The relevant finding of the Bangalore Bench of the Tribunal reads as follows: 6. Aggrieved by the order of NFAC (Appeals), the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India. One of the requirements of Rule 128 for claiming FTC is provided by Rule 128 (8) (9) of the Rules and the same reads thus: (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 specified therein; (ii) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee, (a) from the tax authority of the country or the specified territory outside India; or (b ) from the person responsible for deduction of such tax; or (c) signed by the assessee: Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by, (A) an acknowledgement of online payment or bank counter foil or ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also taxable in India. Article 24 of India Australia DTAA provides for credit for foreign taxes. Article 24(4)(a) is relevant in the present context. Same is extracted below: 4. In the case of India, double taxation shall be avoided as follows: (a) the amount of Australian tax paid under the laws of Australia and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of India in respect of income from sources within Australia which has been subjected to tax both in India and Australia shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax; It was submitted by him that section 90 of the Act read with Article 24(4)(a) provides that Australian tax paid shall be allowed as a credit against the Indian tax but limited to proportion of Indian tax. Neither section 90 nor DTAA provides that FTC shall be disallowed for non-compliance with any procedural requirements. FTC is Assessee s vested right as per Article 24(4)(a) of the DTAA read with Section 90 and same cannot be disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore Chemicals Fertilizers Ltd. v. Deputy Commissioner, (1992 Supp (1) Supreme Court Cases 21) wherein it observed that: The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. Further reliance was placed on the decision of the Hon ble Supreme Court, in the case of Sambhaji and Others v. Gangabai and Others, reported in (2008) 17 SCC 117, wherein it has been held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. It was submitted that filing of Form 67 as per the provisions of section 90 read with Rule 128(9) is a procedural law and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO when the intimation u/s.143(1) of the Act dated 28.5.2020 was passed. He pointed out that the AO or the CIT(A) did not dismiss the Assessee application for rectification u/s.154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No.67 before the due date u/s.139(1) of the Act was fatal to the claim for FTC. 16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold 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. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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