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TMI Blog2024 (7) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is allowed. - Shri Sanjay Garg Judicial Member And Shri Rakesh Mishra, Accountant Member For the Appellant : Shri C.M. Roy, C.A. For the Respondent : Shri Subhro Das, Addl. CIT, Sr. DR ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), Kolkata-22, (hereinafter referred to as the Ld. CIT(A) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for AY 2020-21 dated 17.05.2024 passed against the rectification order u/s. 154 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) by the Assistant Director of Income Tax, CPC, Bengaluru, dated 07.06.2022. 2. The grounds of appeal raised by the assessee are reproduced as under: 1. That the learned CIT (A) has erred in disallowing the foreign tax credit due to delay in submission of Form 67. 2. That the learned CIT (A) has failed to appreciate the fact that in case of delayed filing of Form 67 by way of foreign tax credit which is deducted in foreign country would be denied (sic). 3. For that the assessee craves leave to add, alter or withdraw any ground/s of appeal before or at the time of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2021 and rectification order dated 07.06.2022, it is observed that the claim of tax relief of Rs. 13,28,903/- Under Section 90/90A of the IT Act was disallowed due to non-filing of the form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act. It is pertinent to mention here that the CBDT also through its Notification No. 9 dated 19 September 2017 categorically mandates that for claiming credit of any taxes in a country or territory specified outside India, the assessee shall file Form No. 67 under sub-rule (9) of rule 128 of the Income-tax rules, 1962 before the due date for filing the return of income under section 139(1) the Income-tax Act, 1961 and also mandates that filing of Form No. 67 shall precede the filing of the return. In the instant case, the Form No 67 was not filed along with the return of income. Although a claim of foreign tax credit was made in the return of income and the same was not accompanied by the Form No 67 which is mandated by the law. However, the appellant claimed that on 26.12.2020 he had submitted the Form 67 after receiving communication from the e-Filing Team, Income Tax Department on 25.12.2020. But, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord, we find that the assessee served abroad and some foreign tax to the tune of Rs. 17,72,470/- was deducted in United Kingdom under DTAA between India and UK and provision of Section 90(2) of the Act. We also note that Rule 128 sub-Rule 9 provides that Form-67 should be filed on or before the due date of filing the return of income. However, we note that nowhere it is stated that in case of delayed filing of Form-67 by way of foreign tax credit which is deducted from the assessee in foreign country i.e. U.K. would be denied. Accordingly, we are of the considered view that the assessee is entitled to get this foreign tax credit of Rs. 17,72,470/- u/s 90 of the Act. We also note that the claim in respect of foreign tax was allowed in the order passed u/s 143(1) of the dated 28.03.2019 and was withdrawn by the AO by passing order u/s 154 of the Act when the assessee filed form 67 before the AO. In our opinion the credit in respect of foreign tax cannot be denied to the assessee for the technicality of not filing the form 67 within the due date of return u/s 139(1) of the Act. The case of the assessee finds support from the decision of Coordinate Benches in the case of Atanu Mukherje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 challan for payment of tax where the payment has been made by the assessee; (B) proof of deduction where the tax has been deducted. (9) The statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under subsection (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the ground on which the revenue authorities rejected the Assessee's application u/s. 154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard. 9. Further, similar issue arose in the case of Sukhdev Sen Vs. ACIT, Circle -1, Kolkata (ITA No. 78/Kol/2014, dated 26.03.2024). The relevant extract of the aforesaid order is as under: 7. Before proceeding further, we would like to reproduce rule 128 of the Income-tax Rules, 1962 (the Rules) which relates with foreign tax credit as under: Foreign Tax Credit. 128 (1) An assessee, being a resident shall be allowed credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such lax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has 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 inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the credit of FTC. In support of the claim, the assessee has relied upon several decisions including the following decision: i. CIT vs. G.M. Knitting Industries (P) Ltd. 71 Tuxmann.com 35(SC) ii. Brinda Ramakrishna us. IPO 193 ITD 840 (Bang) iii. 42 Hertz Software India Pvt. Ltd vs Asst. CIT. Ita No. 29. Hang/2001 iv. Duraiswamy Kumaraswamy vs. PCIT, W.P No. 5834 of 2022 11. Hon'ble Supreme Court, in the case of Mangalore Chemicals Fertilizers Ltd. v. Deputy Commissioner, [1992 Supp (1) Supreme Court Cases 21) in respect of compliance with the procedural requirements have observed that: The mere fact that it is statutory does not matter one way of that 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 nonobservance of all conditions irrespective of the purposes they were intended to serve. 12. Further, in the case of Engineering Analysis Centre of Excellence Private Limited vs the Commissioner of Income -tax Anr. Civil Appeal Nos. 8733-8734 of 2018 Ors. Hon'ble Supreme Court have held as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration 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 3 does not provide for disallowance FTC in case of delay filing of form 67 is not mandatory het directory requirement and DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. 9. In the result, the appeal filed by the assessee is allowed. 15. Similarly, in the case of Ashish Agrawal Vs. Income Tax Officer, Ward-12(1), Hyderabad ITA No. 337/Hyd/2023 ITAT HYDERABAD BENCHES B , have held vide order dated 26/09/2023 that: 11. As far as the issue of FTC is concerned, learned AR placed reliance on the decision in the case of Ms. Brinda Rama Krishna (supra) in the case of Ms Brinda Rama Krishna (supra), the Bench considered the issue in the light of the provisions of DTAA, section 295(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the impugned assessment year 2019-20, the Form No. 67 prescribed in rule 128 of the rules for claiming FTC was inadvertently not uploaded along with the ITK which was uploaded on 02.02.2021 The return was processed on 26.03.2021, however, the credit of FTC was not given effect to and the request made to the CPC to give effect to the FTC was not accepted and intimation along with notices of demand was received. The assessee also could not succeed with the rectification application filed and approached the CIT u/s 264 of the Act and at the same time filed a writ petition before the Hon'ble Madras High Court. It was stated by the respondent- department that rule 128 is mandatory and cannot be considered as directory in nature. The petitioner referred to the judgment of the Hon'ble Supreme Court in the case of CIT vs. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015 The Hon'ble High Court allowed the Writ Petition in favour of the assessee by holding as under. 11. The law laid down by the Hon'ble Apex Court in Commissioner of Income Tax, Maharashtra v. G.M. Knitting Industries (P) Limited in Civil Appeal Nos. 10782 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign tax credit in respect of tax paid outside India by the assessee in accordance with law and the DTAA between India and the USA. Accordingly, grounds no. 2,3,4 of the appeal are allowed. 10. The relevant extract of Article 25 of India Singapore Double Taxation Avoidance Agreement (DTAA) is as under: 1. The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where express provision to the contrary is made in this Agreement. 2. Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Singapore, India shall allow as a deduction from the tax on the income of that resident an amount equal to the Singapore tax paid, whether directly or by deduction. Where the income is a dividend paid by a company which is a resident of Singapore to a company which is a resident of India and which owns directly or indirectly not less than 25 per cent of the share capital of the company paying the dividend, the deduction shall take into account the Singapore tax paid in respect of the profits out of which the dividend is paid. Such deduction in either ..... X X X X Extracts X X X X X X X X Extracts X X X X
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