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TMI Blog2024 (12) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... hivel, D.R. ORDER PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal by assessee is directed against order of NFAC for the assessment year 2018-19 dated 6.12.2023. The assessee raised following grounds of appeal: 1. Learned AO has erred in the facts and circumstances of the case and in law in issuing the impugned rectification order dated 1 9 March 2020 under Section 143(1) of the Act disallowing the claim for Foreign Tax Credit (FTC) of INR preferred by the Appellant under Article 23(2) of the India-Japan Double Taxation Avoidance Agreement (DTAA) read with Section 90 of Act and thereby raising a demand of INR 6,81,430 incorrectly. 2. Learned AO has erred in the facts and circumstances of the case and in law by imposing interest of INR 1 under Section 234B and 234C of the Act. 3. The Learned AO has erred in the facts and circumstances of the case and in law in issuing the intimation order dated 6 March 2021 under Section 245 of the Act, 21 January 2022 under Section 143(1) of the Act and 3 August 2022 under Section 143(1) of the Act adjusting the Mura of INR 59.190, INR 7,480 and INR 28,400 for the AY 2020-21. AY 2021-22 and AY 2022-23 respectively against the demand of AY 2018-19. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under rule 128 of the I T Rule, 1962 was not filed within the due date of filing of the return of income for the relevant assessment year. 2.1 As per Rule 128 of the Income-tax Act, 1962, credit of foreign tax paid by the assessee in the country or specified territory outside India is allowed in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India. Further, as per sub-rule 8 of Rule 128, statement of income from foreign country and tax paid in foreign country on such income, shall be furnished in Form- No. 67 for availing foreign tax credit. Further sub-rule 9 of Rule 128 states that statement in Form No. 67 shall be furnished on or before the due date for filing of return of income u/s 139(1) of the Act. Sub-rule 1 of Rule 128 states that a resident assessee shall be allowed a credit of foreign tax paid by him in a country or specified territory outside India, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India. This foreign tax credit is subject to the manner and to the extent as specified in this rule. Subrule 1 of Rule 128 make mandatory for the Assessing Officer to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. The findings of this Tribunal are reproduced below: 2. The Assessee is an individual and during the previous year relevant to AY 2018-19 an ordinary resident in India. The Assessee worked with Ernst Young Australia from 20.11.2017 till 16.05.2019. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit for FTC as claimed in the return should be given. In the rectification order dated 10.03.2021, the AO upheld the action on the ground that the Assessee has failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) of the Rules. 6. On appeal by the Assessee, the CIT(A) vide Order dated 03.09.2021 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 nonest 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 67 is not filed within the above stated time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. The learned counsel for the Assessee submitted that in case the intention was to deny the FTC, either the Act or the Rules would have specifically 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circulars: Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) CIT v Eli Lily Co (India) P Ltd (2009) 178 Taxman 505 (SC) GE India Technology Centre P Ltd v CIT (2010) 193 Taxman 234 (SC) Engineering Analysis Centre of Excellence P Ltd v CIT (2021) 125 taxmann.com 42 (SC) (Pg 106-109 of PB 2-Para 25 26) CBDT Circular No 333 dated 2/4/82 137 ITR (St.) It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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