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TMI Blog2023 (9) TMI 1560X X X X Extracts X X X X X X X X Extracts X X X X ..... credit - Appeal of the assessee is allowed for statistical purposes only. - SHRI KUL BHARAT, JUDICIAL MEMBER For the Assessee : Shri Devesh Poddar, Advocate For the Revenue : Shri Om Parkash, Sr. DR ORDER This appeal by the assessee pertaining to Assessment Year 2020-21 is filed against the order of the ld.CIT(A), National Faceless Appeal Centre, Delhi, dated 27th April, 2023. The assessee has raised the following grounds of appeal:- 1. For that the ld CIT(A) was not justified in confirming the addition made vide order U/s 143(1) dated 24/12/2021 wherein an addition of Rs. 28,02,692/- was made by not allowing the exemption of salary income earned in Japan. 2. For that the above disallowance of exemption has been made on the ground that the assessee has failed to file Form 67 along with the ITR. Though it is agreed that the Form 67 was not filed along with the ITR, however the same was filed belated on 05/03/2022 and is on record. As such, the Id CIT(A) ought to have considered while adjudicating the appeal and as such, the exemption disallowed is fit to be revoked. 3. For that such disallowance by CPC is uncalled for since the same is a debatable issue and cannot be done in an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that filing of Form 67 before the due date is a procedural/directory requirement and is not a mandatory requirement. Violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. Further the claim of FTC was made by the assessee under the provisions of the Double Tax Avoidance Agreement (DTAA) which was signed between India and Japan in 1990 under which Article 2(1) covers Income Tax. Further Article 23(2) with respect to elimination of double taxation reads as below:- 2. Double taxation shall be avoided in the case of India as follows : (a) Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Japan, India shall allow as a deduction from the tax on the income of that resident an amount equal to the Japanese tax paid in Japan, whether directly or by deduction. Such deduction in either case shall not, however, exceed that part of the income-tax (ascomputed before the deduction is given) which is attributable, as the case may be, to the income which may be taxed in Japan. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no condition prescribed in DTAA that the FTC can be disallowed for non- compliance of any procedural provision. As the provisions of DTAA overrides the provisions of the Act, the assessee has vested right to claim the FTC under the tax treaty, and the same cannot be disallowed for mere delay in compliance of a procedural provision. In other words, we would like to submit 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 only 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. 7. That the lower authorities intends to disallow the claim of the assessee in terms of Rule 128(9), however as stated above, the provisions laid down in the Income Tax Rules shall stand to be overridden by the specific provisions mentioned in the DTAA more so to the extent that the same is beneficial to the tax payer. And as such, since the DTAA does not specifically state to disallow the claim of FTC on mere delay in filing of Form 67, we would submit that the disallowance made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 90/90A - Assessing Officer disallowed claim, on ground that assessee had not filed Form No. 67 along with return - Assessee filed Form No. 67 before Commissioner (Appeals) - Commissioner (Appeals) held that since assessee had failed to file Form No. 67 within due date specified for filing return under section 139(1), Assessing Officer had rightly disallowed claim for foreign tax credit - It was noted that Bangalore Bench of Tribunal on identical issue in case of Ms. Brinda Ramakrishna v. ITO [2022] 135 taxmann.com 358/193 ITD 840 held that non-furnishing of Form No. 67 before due date specified for furnishing return under section 139(1) was not fatal to claim for foreign tax credit - Whether Assessing Officer was to be directed to give credit for foreign tax as per Form No. 67 filed before Commissioner (Appeals) - Held, yes [Paras 5 and 6] [In favour of assessee] Ritesh Kumar Garg Vs ITO in ITA No. 261/JP/2022 dated 15/09/2022 - ITAT Jaipur Bench held that:- Held that filing of Form 67, in my view, is a procedural/directory requirement and is not a mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantive right of claiming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the assessee further placed reliance on the decision of the Division Bench of this Tribunal rendered in the case of Vikas Daga vs. ACIT in ITA No.2536/Del/2022 pertaining to assessment year 2019-20. 5. On the other hand, the ld. DR opposed the submissions of the assessee and supported the orders of the authorities below. 6. I have heard the rival contentions and perused the material available on record. The Division Bench of this Tribunal in the case of Vikas Daga vs. ACIT (supra) has held as under:- 8. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the assessee holds a foreign tax credit certificate for Rs.1887114/-. In our considered opinion filing of form 67 is a procedural / directory requirement and is not a mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantive right of claiming the credit of FTC. We accordingly direct the AO to allow the credit of FTC and hold that rule 128(9) of the Rules does not provide for disallowance FTC in case of delay filing of form 67 is not mandatory but a directory requirement and DTAA overrides the provisions of the Act and the ..... 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