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TMI Blog2024 (12) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... Sarma, Judicial Member And Shri Rakesh Mishra, Accountant Member For the Assessee : Shri Rajat Agarwal, AR For the Revenue : Shri Supriya Pal, 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 2019-20 dated 16.05.2024, which has been passed against the intimation u/s 143(1) of the Act issued by the CPC, Bengaluru. 2. The grounds of appeal raised by the assessee are reproduced as under: (1) For that Commissioner of Income Tax Appeal-22, Kolkata (in short CIT (A) ) erred on only relying on procedural Notification No. 9 dated 19 September 2017 for not filing Form-67 before filing the return. Here as per section 295(1) of the Act, CBDT has been given the power to prescribe the procedure for granting foreign tax credit and board does not have power to prescribe for disallowance of foreign tax credit. (2) For that CIT (A) erred in trite law that DTAA overrides the provisions of the Act and the Rules, as held by various Hon'ble High Courts, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct dated 23.03.2021 and found that relief under section 90 of the Act had not been allowed amounting to Rs 73,658/-. All the details of foreign income and taxes was provided by Appellant in the income tax return under Schedule FSI: Details of Income from outside India and tax relief. The reason for not granting Foreign Tax Credit (in short FTC ) was not given in the intimation u/s 143(1) of the Act. After consulting with a Chartered Accountant assessee came to know that Rule 128 relates to claiming foreign tax credit. Moreover, Form No.67 was to be filed within the due date of filing return of income for claiming credit of taxes paid outside India. However, assessee filed belated Form No. 67 on 08.04.2021. Against the intimation u/s 143(1) of the Act in which the credit for FTC was not allowed, the assessee filed a rectification application which was rejected vide order dated 14.06.2021by the Ld. AO/ CPC. The assessee filed an appeal before the Ld. CIT(A) and cited several case laws in support of claim of FTC. However, the Ld. CIT(A) dismissed the appeal by giving the following findings: - Discussions and Findings:- I have carefully examined the material at hand including the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the appeal before the Tribunal. 4. Rival contentions have been heard and the Paper Book filed by the assessee was examined. During the course of appeal it was contended that the assessee is a salaried employee and had shifted to Thailand and the return of income was filed on 27.08.2019, which was processed u/s 143(1) of the Act on 23.03.2021 and since the credit for FTC was not allowed, a rectification application was filed which has been disposed off vide order dated 13.06.2021 mentioning that in the order u/s 154 of the Act there is no change in the computation of interest u/s 234B and 234C of the Act as the same has been correctly computed while processing, thereby, inter-alia implying that the credit for FTC was denied. The assessee relied upon the decision of in ITA No. 78/KOL/2024 and brought our attention to page 150 of the Paper Book at para 17 and also brought our attention to page 43 of the Paper Book containing the Doble Taxation Avoidance Agreement between India and Thailand dt. 27.06.1986. The form no.67 was filed on 08.04.2021, which was subsequent to the intimation u/s 143(1) of the Act on 23.03.2021. 5. Further, similar issue arose in the case of Sukhdev Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, we would like to mention that rule 128(9) provides that Form No. 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 No. 67 is not filed within the required time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. It is therefore evident that if the intention of the legislature were to deny the foreign tax credit, either the Act or the rules would have specifically provided that the foreign tax credit would be disallowed if the assessee does not file Form No. 67 within the due date prescribed under section 139(1) of the Act. We further note that Filing of Form No. 67 is a procedural/directory requirement and is not a mandatory requirement and violation of procedural norm does not extinguish the substantive right of claiming 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA no. 454/ Bang/2021 by order dated 17/11/2021. 7. It's a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence (P) Ltd reported im (2021) 432 ITR 471. We accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee. In Vikash Daga Vs ACIT Circle-3 (1) Gurgaon ITA No.2536/Del/2022, the ITAT DELHI BENCH 'H', NEW DELHI vide order dated 14/06/2023 have held that: 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 rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the same, we are of the considered Page 6 of 8 ITA No. 337/Hyd/2023 opinion that the decisions relied upon by the assessee are applicable to the facts of the case and the grounds raised by the assessee are accordingly allowed. In the result, appeal of the assessee is allowed. We have also gone through the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy us. PCIT (supra) and found that the facts are identical to the facts of the case of the assessee and the decision is squarely applicable to the facts of the case of the assessee. In that case, the petitioner was resident of India and had filed Indian ITR and claimed benefit of FTC u/s 90/91 of the Act row. Article 24 of the India-Kenya DTAA. During the year, he had income of both Kenya and India but while filing the Indian ITR 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst respondent is directed to consider only on the aspect of rejection of FTC clam within a period of 8 weeks from the date of receipt of copy of this order Respectfully following the order of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT (supra) and concurring with the views held by the coordinate Benches of the Tribunal (supra), we hold that merely because the assessee could not file Form No. 67 within the prescribed time limit as per the provisions of rule 128(9) of the Income-tax rules, 1962, as it stood during the year under consideration, will not preclude the assessee from claiming the benefit of the foreign tax credit in respect of taxes paid outside India. Therefore, the claim of the assessee is allowed and the Assessing Officer is directed to give benefit of 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. 6. The relevant extract of Article 23 of India Thailand Double Taxation Avoidance Agreement (DTAA) is as under: ARTICLE 23 ELIMINATION OF DOUBLE TAXATION 1. The laws in force in either of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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