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TMI Blog2025 (3) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Keshav Dubey, Judicial Member For the Assessee : Shri Navneet N Kini, CA For the Revenue : Shri Ganesh R Gale, Standing Counsel for Dept. (DR) ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the Addl/JCIT(A), Thane dated 19/11/2024 in ITA No. ITBA/APL/S/ 250/2024-25/1070462006(1) for the assessment year 2020-21. 2. The only issue raised by the assessee is that the learned CIT(A) erred in not allowing the claim of foreign tax credit. 2.1 The necessary facts are that the assessee is an individual and employed with the company, namely Tech Mahindra Ltd. The assessee during the year under consideration also received salary from Tech Mahindra Ltd -UK from October 2019 to March 2020 on which he paid taxes in UK for Rs. 1,52,019/- only. Accordingly, the assessee in the return of income filed in India as on 10-02-2021, claimed credit of impugned payment of taxes in UK as per the provision of section 90/90A of the Act. 3. However, the CPC while processing the return as per the provision of section 143(1) of the Act disallowed the claim of the assessee for foreign tax credit as Form-67 prescribed under rule 128 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h governs the claim of FTC, does not specify any consequence of non-filing or delayed filing of Form 67. In the absence of such penal consequences, the requirement should be construed as procedural rather than substantive. The intent of the legislature, as reflected in section 90 of the Act, is to provide relief from double taxation. The denial of Foreign Tax Credit solely on account of a procedural lapse would defeat this very purpose. Further the provisions of DTAA override domestic tax laws, as established by various rulings of the Hon'ble Supreme Court. The India-UK DTAA specifically allows the set-off of foreign taxes paid against Indian tax liability. The Revenue authorities cannot deny FTC on a procedural ground when the substantive conditions for claiming such relief under the DTAA and the Income Tax Act have been met. 9.2 We further find that the issue regarding the procedural requirement of filing Form 67 has already been adjudicated by various coordinate benches of the Tribunal, wherein it has been consistently held that the filing of Form 67 is a directory requirement and not a mandatory precondition for claiming FTC. This Tribunal in in the case of Brinda Rama Krishna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 subrule (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 139, in the manner specified for furnishing such return of income." 4. The Assessee claimed FTC of Rs. 4,73,779/- u/s. 90 of the Act read with Article 24 of India Australia tax treaty ("DTAA") in a revised return of income filed on 31.8.2018. The Assessee had not filed the Form 67 before filing the return of income. On realising the same, the Assessee filed Form 67 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act read with Article 24(4)(a) provides that Australian tax paid shall be allowed as a credit against the Indian tax but limited to proportion of Indian tax. Neither section 90 nor DTAA provides that FTC shall be disallowed for non- compliance with any procedural requirements. FTC is Assessee's vested right as per Article 24(4)(a) of the DTAA read with Section 90 and same cannot be disallowed for non-compliance of procedural requirement that is prescribed in the Rules. 8. It was further submitted by him that Section 295(1) of the Act gives power to the CBDT to prescribe Rules for various purposes. Section 295(2)(ha) gives power to the Board to issue Rules for FTC. The relevant extract is as follow: "(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters:- (ha) the procedure for granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act;" 9. It was submitted that the Board has power to prescribe procedure to granting FTC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. It was submitted that filing of Form 67 as per the provisions of section 90 read with Rule 128(9) is a procedural law and should not control the claim of FTC. 12. It was further submitted that even in the context of 80IA(7), 10A(5) etc, wherein there is specific provision for disallowance of deduction/exemption if audit report is not filed along with the return, various High Courts have taken a view that filing of audit report is directory and not mandatory. Reliance in this regard was placed on the following cases: CIT vs Axis Computers (India) (P.) Ltd [2009] 178 Taxman 143 (Delhi) PCIT, Kanpur vs Surya Merchants Ltd [2016] 72 com 16 (Allahabad) CIT, Central Circle vs American Data Solutions India (P.) Ltd [2014] 45 com 379 (Karnataka) CIT-II vs Mantec Consultants (P.) Ltd [2009] 178 Taxman 429 (Delhi) CIT vs ACE Multitaxes Systems (P.) Ltd [2009] 317 ITR 207 (Karnataka). 13. It was submitted that as per the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s. 154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s. 154 of the Act, can be resorted to. Even otherwise 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. 9.4 The finding of the coordinate bench in above discussed case was further followed in the case of Shashidhar Seetharam Sharma vs. ITO (ITA No. 708/Bang/2022). 9.5 In view of the above detailed discussion and considering the factual matrix of the case, the settled legal position, and judicial precedents, we hold that the requirement of filing Form 67 is directory and not mandatory. The assessee cannot be deprived of Foreign Tax Credit merely on account of a procedural lapse. The case law referred by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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