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TMI Blog2024 (12) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Pradip Kumar Biswas, DR ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeal), 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 2022-23 dated 16.07.2024, which was filed 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. (a) The Commissioner of Income Tax (Appeals) - 22, Kolkata erred in continuing the action of AO in not granting Foreign Tax Credit relief amounting to Rs. 34,09,907/- u/s 90 of the Act, as claimed by the Appellant in his return of income. The Appellant submits that being a resident of India in his return of income filed in India, he has offered pension income aggregating to Rs. 1,70,49,933/- earned in United Kingdom of Great Britain and Northern Ireland (UK) on which he has paid taxes of Rs. 34.09.9071- in UK hence the AO ought to have allowed foreign tax credit of Rs. 34.09.987/- u/s 90 of the Act while assessing Appellant's total income. (b) The CIT(A) erred in confirming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. He also claimed that this was just a procedural defect based on which he requested to allow the claim of foreign tax credit to the tune of ₹34,09,987/-. Before the Ld. CIT(A), it was claimed that the AO ought to have the credit of tax u/s 90 of the Act. Before the Ld. CIT(A), the assessee could not succeed and the appeal was dismissed by mentioning as under: As all the grounds relate to just one issue, hence these are being disposed as one as below. On perusal of the Intimation order u/s 143(1) of the Act dated 01.12.2023, it is observed that the claim of tax relief of Rs. 34,09,987/- Under Section 90/90A of the IT Act was disallowed. It is assumption of the appellant that inspite of filing of the Form-67, the claim U/s 90/90A has not been allowed. However, the appellant did not furnish the Form 67 during the appellate proceedings but claimed that the Form-67 for the impugned year was filed by the appellant on 30.01.2024 which is after the Intimation order u/s 143(1) dated 01.12.2023. Before proceeding further, it is necessary to reproduce Rule 128 of Income Tax Rules 1962 for the AY-2022-23 which relates to furnishing of Form 67 as under: (9) The statement in F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income is offered to tax or assessed to tax in India 8. We further note that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia 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 non-observance 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 under that the provisions of DTAA shall override the provisions of the Income-tax Act unless they are more beneficial to the assessee: 165. The conclusions in the aforestated paragraph have no direct relevance to the facts at hand as the effect of section 902) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) of the Act, the decisions of the Hon'ble Apex Court in the case of Mangalore Chemicals Fertilizers Ltd. Vs. Deputy Commissioner (1992 Supp (1) SCC 21), Sambhaji Vs. Gangabai (2008) 17 SCC 117 and a lot many decisions of the Hon'ble Apex Court including the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of 2013 and 4048 of 2014 dated 24.06.2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FIC, however the same was filed before passing of the final assessment order. The filing of FTC in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreement (DTAA) is as under: 1. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof): (a) Indian tax payable under the laws of India and in accordance with the provisions of this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within India (excluding, in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Indian tax is computed. (b) In the case of a dividend paid by a company which is a resident of India to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit shall take into account in [addition to any Indian tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph] the Indian tax payable by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Export (Control) Act, 1947 (18 of 1947). 4. The provisions referred to in this paragraph are : (a) sections 10(4), 10(4B), 10(6)(viia), 10(15)(iv), 33AB, 80HHD, 80-I and 80-IA; (b) any other provision which may subsequently be enacted granting an exemption or reduction from tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character to a provision referred to in sub-paragraph (a) of this paragraph, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character; (c) sections 10A and 10B. 5. Relief from United Kingdom tax shall to be given by virtue of this paragraph 3 of this Article in respect of income from any sources if the income relates to a period starting more than 10 fiscally years after the deduction in computing taxable income or exemption from, or reduction of, Indian tax is first granted to the resident of the United Kingdom or to the resident of India, as the case may be, in respect of that source. 6. Income which in accordance with provisions of this Convention is not to be subjected to tax in a Contracting State may be taken into account for calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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