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TMI Blog2025 (3) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... has arisen from the intimation order No. CPC/2324/A2/418115720 dated 30.04.2024 passed by CPC, Bengaluru u/s. 143(1) of the Income-tax Act, 1961. 2. Grounds of Appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Agra Bench, Agra, reads as under : "1 That appellant craves leave to add, alter, amend, or withdraw any of the grounds of appeal at or before the time of hearing. 2 THAT appellant is aggrieved by the intimation under Section 143(1) dated April 30, 2024 (DIN: CPC/2324/A2/418115720, Demand Reference Number: 2024202337247266003T), wherein the Foreign Tax Credit of Rs. 10,95,293 claimed under Section 90/90A of the Income Tax Act, 1961, has been denied. This denial is erroneous and contrary to the provisions of the Act. 3. That appellant has duly complied with the provisions of Section 90/90A of the Income Tax Act, 1961, and the relevant Double Taxation Avoidance Agreement (DTAA) between India and Germany. The salary income earned for services rendered in Germany during the period from October 15, 2022, to March 31, 2023, has been offered to tax in India, and the foreign tax credit has been claimed appropriately. 4. That ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or before the due date for filing of return of income u/s. 139(1), but the said requirement is directory in nature and prayers were made to grant relief for FTC on the salary income earned in Germany. Ld. CIT(Appeals) dismissed the appeal of the assessee by holding that if law stipulates certain thing to be done in a particular manner then the same has to be done in that particular manner and not otherwise. 5. Still aggrieved, the assessee has filed second appeal with ITAT and at the outset, ld. Counsel for the assessee submitted that the assessee has duly filed Form-67 on 02.05.2024 wherein there was a credit of Rs. 10,95,293/- claimed by the assessee towards FTC. It was submitted that the assessee was working with Google, Germany and was ordinarily resident in India during the year under consideration. Foreign Tax of Rs. 10,96,674/- was deducted and an amount of Rs. 10,95,293/- was claimed u/s. 90 of the Act as tax relief, as the total global income was declared by the assessee in return of income filed in India with Revenue. There was tax deducted on dividend earned from USA to the tune of Rs. 604/- apart from tax deducted by Google Germany on salary earned in Germany from 15.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income was filed belatedly by the assessee u/s 139(4). The assessee has declared income from salary to the tune of Rs. 53,51,596/-. The assessee has claimed that she worked in Germany with Google Germany for the period from October 15, 2022 to March 31,2023. Assessee claimed credit of foreign prepaid taxes to the tune of Rs. 10,95,293/- u/s 90, out of which claim of credit of prepaid taxes u/s. 90 to the tune of Rs. 10,94,689/- was made with respect to income from salary to the tune of Rs. 35,96,395/- earned from Google Germany. The Revenue has not allowed the claim of deduction towards foreign tax credit u/s. 90 of the Act on the ground that Form-67 was not filed on or before the due date of filing of return of income as prescribed u/s 139(1), by relying on Rule 128(8) and 128(9) of the 1962 Rules. Return of income was filed by assessee belatedly on 31.08.2023, which was processed by the Revenue vide intimation u/s 143(1) dated 30.04.2024. Due date of filing the return of income was 31.07.2023. The assessee is resident and ordinarily resident in India under the provisions of 1961 Act. 6.2 The assessee had not filed form No. 67 prior to due date of filing the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the government, the specific provisions made in such agreement shall prevail over the general provisions contained in the Income Tax Act. The CBDT vide its Circular No. 333 dated 02/04/1982 has held that:- SECTION 90. AGREEMENT WITH FOREIGN COUNTRIES [CORRESPONDING TO SECTION 40A OF THE 1922 ACT] 627. Specific provisions made in double taxation avoidance agreement Whether it would prevail over general provisions contained in Income-tax Act 1. It has come to the notice of the Board that sometimes effect to the provisions of double taxation avoidance agreement is not given by the Assessing Officers when they find that the provisions of the agreement are not in conformity with the provisions of the Income-tax Act, 1961. 2. The correct legal position is that where a specific provision is made in the double taxation avoidance agreement, that provisions will prevail over the general provisions contained in the Income-tax Act. In fact that the double taxation avoidance agreements which have been entered into by the Central Government under section 90 of the Income-tax Act, also provide that the laws in force in either country will continue to govern the assessment and taxation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance. If the adjustment has been made on the basis of first defect i.e., for procedural irregularity then according to the decisions referred by the Id. Counsel for the assessee, this irregularity is not fatal enough to deny the claim of deduction u/s 80IC of the Act. More so, when in response to the first proposed adjustment, the assessee has reiterated submission of Form 10CCB. As far as the arguments raised by the Id. D/R is concerned, if a disallowance is to be made after filing of Form 10CCB, then it is a debatable issue and the same is not permissible u/s 143(1) in a prima facie adjustment and the assessee should have been given a notice for that. In other words, if a disallowance is required to be established by arguments and long drawn process of reasoning on points, which there may conceivably be two opinions about, then the case should have been selected for scrutiny assessment. In view of the above discussion, we delete the disallowance of deduction u/s 80IC of the Act, made by the Assessing Officer and upheld by the Ld. CIT(A) and allow the appeal of the assessee. As such, we would like to contend that the CPC was not right in disallowing the claim of FTC solely o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves to be allowed to the assessee even if Form 67 was filed by the assessee after the due date of filing the return under section 139(1) of the IT Act, 1961, and in our view not allowing foreign tax credit by AO (CPC) was nothing, but a mistake apparent on record. Therefore, we direct the revenue to allow the claim of the assessee. In the case of Vikash Daga vs. ACIT (supra), held as under:- "8. 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 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 does not provide for disallowance FTC in case of delay filing of form 67 is not mandatory but a directory requirement and DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act." 9. In the light of foregoing discussions, we are of the opinion that filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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