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TMI Blog2024 (12) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(1) of the Income-tax Act, 1961 ("the Act"), disallowed the claim by way of intimation dated 23.03.2021. 4. On appeal, the learned CIT(A) upheld the disallowance made by the Assessing Officer (AO). 5. Aggrieved by the said order, the assessee has preferred the present appeal before this Tribunal. 6. Before us, the learned Authorized Representative ("AR") for the assessee submitted that the benefit of the FTC cannot be denied if it is claimed in a revised return of income, which was available for consideration by the AO during the processing under Section 143(1) of the Act. In support of this contention, the AR relied on various judicial precedents. 7. On the other hand, the learned Departmental Representative ("DR") strongly supported the orders of the authorities below. 8. We have carefully considered the rival submissions, the material placed on record, and the judicial precedents cited. At the outset, we note that this Tribunal, in the case of Basavalinga Sadasivaiah Ajaikumar (ITA No. 1470/Bang/2024, order dated 19.09.2024), dealt with identical facts and circumstances and decided the issue in favor of the assessee. The relevant extract of the said order is reproduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 16-5-2019. Since her global income was taxable in India, the Assessee offered to tax salary income earned for services rendered in Australia for the period from December 2017 to March 2018 to tax in India. The Assessee claimed foreign tax credit ("FTC") for taxes paid in Australia. 3. There is no dispute that the Assessee is entitled to claim FTC. Rule 128 of the Income-tax Rules, 1962 (Rules) provides for giving FTC and reads thus: "Foreign Tax Credit. 128. (1) An assessee, being a resident shall be allowed a 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 tax 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." One of the requirements of rule 128 for claiming FTC is provided by rule 128 (8) & (9) of the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the Order of AO. The CIT(A) held that the Assessee has not filed Form 67 before the time allowed under section 139(5) of the Act, and therefore Form 67 is non-est in law. The CIT(A) also held that provisions of rule 128 are mandatory in nature. The CIT(A)rejected the contention of the Assessee that filing of Form 67 is a procedural requirement and noncompliance thereof does not disentitle the Assessee of the FTC. 7. Aggrieved by the order of the CIT(A), the Assessee is in appeal before the Tribunal. The learned counsel for the Assessee submitted that disallowance of FTC is bad in law. He submitted 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 such income 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 Agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally provided that the FTC would be disallowed if the assessee does not file Form 67 within the due date prescribed under section 139(1) of the Act. It was submitted that that there are many sections in the Act which specifically deny deduction or exemption or relief in case the return is not filed within prescribed time. Reference was made to section 80AC, 80-IA(7), 10A(5) and 10B(5). Such language is not used in rule 128(9). Therefore, such condition cannot be read into rule 128(9). 11. It was further submitted that Filing of Form 67 is a procedural/directory requirement and is not a mandatory requirement. It was submitted that violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. Reliance was placed on the decision of the Hon'ble Supreme Court, in the case of Mangalore 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that when there is no condition prescribed in DTAA that the FTC can be disallowed for noncompliance of any procedural provision. As the provisions of DTAA override the provisions of the Act, the Assessee has vested right to claim the FTC under the tax treaty, the same cannot be disallowed for mere delay in compliance of a procedural provision. 14. The learned DR reiterated the stand of the revenue that rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to give FTC. He also submitted that the issue was debatable and cannot be subject matter of decision in sec.154 proceedings which are restricted in scope to mistakes apparent on the face of the record. 15. In his rejoinder, the learned counsel for the Assessee submitted that Form No. 67 was available before the 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. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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