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TMI Blog2025 (3) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... the foreign tax credit of ₹ 2,34,743/- only. 3. The brief facts are that the appellant, a salaried individual employed with Evry India Pvt. Ltd. The assessee in the original returned filed dated 29-08-2018 declared gross income from the salary at ₹ 3,85,964/- and after claiming deduction under section 80C and 80D of the Act for ₹ 1,25,984/- declared net taxable income at Rs. 2,59,980/- only. 4. Subsequently, the assessee filed revised return dated 28-03-2019 in which the assessee declared income under head salary at ₹ 20,19,492/- and after claiming deduction under section 80C and 80D of the Act for ₹ 1,25,984/- declared net taxable income of ₹ 18,93,510/- only. The assessee computed gross tax liability (tax + cess) on the declared income at ₹ 3,91,970/- against which claimed relief under section 90 of the Act, amounting to ₹ 2,34,743/- on account of taxes paid in foreign country namely "Norway". 5. The Centralized Processing Centre (CPC), while processing the revised return under section 143(1) of the Act, disallowed the assessee's claim for foreign tax credit under section 90 of the Act. 6. Aggrieved by the intimation order unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, CBDT Notification No. 9 dated 19.09.2017 established the procedure for online filing of Form No. 67, stipulating that it must be submitted before the filing of the return of income. In the present case, the due date for filing the return of income for Assessment Year (A.Y.) 2018-19, after an extension, was 31.08.2018. Form No. 67, which is a prerequisite for claiming foreign tax credit, was not submitted at the time of filing the original return. Instead, the appellant filed a revised return on 28.03.2019, and Form No. 67 was also submitted on the same date. This delay in submission meant that the appellant did not adhere to the procedural requirements mandated under Rule 128 of Income Tax Rule. The requirement that Form No. 67 must be furnished before or at the time of filing the return is not merely procedural but a substantive requirement to establish the validity of the claim. Since the appellant did not file Form No. 67 within the statutory time limit, the conditions for claiming foreign tax credit under Section 90/90A were not fulfilled. 13. The learned CIT(A) further emphasized that there are no express provisions in the Act that empower any authority to condone the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecedence over domestic tax laws, and therefore, the claim for FTC should not have been disallowed merely on procedural grounds. 17.2 The learned AR also submitted that the leaned CIT(A) failed to consider relevant decisions from the jurisdictional ITAT. The appellant specifically relied on the rulings in Shashidhar Seetharam Sharma Vs ITO (ITA No. 708/Bang/2022, dated 19-09-2022) and Brinda Ramakrishna Vs ITO (ITA No. 454/Bang/2021, dated 17-11-2021), where it was held that Rule 128(9) of the Income Tax Rules does not mandate disallowance of FTC due to a delay in filing Form 67. These rulings established that the filing of Form 67 is a directory requirement rather than a mandatory one, and procedural lapses should not result in the denial of a legitimate tax credit. Therefore, the appellant contended that the disallowance of FTC was erroneous and should be reversed. 18. On the contrary, the learned DR vehemently supported the findings of the authorities below. 19. We have heard the rival contentions of both the parties and perused the materials available on record. The brief facts of the case are that the assessee, a salaried individual employed with Evry India Pvt. Ltd., had in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of the intimation under Section 143(1), meaning there was no prejudice caused to the revenue. 19.5 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 in ITA No. 454/Bang/2021 for AY.2018-19 vide order dated 17.11.2021 has held that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides 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 relevant findings of the Coordinate Bench in the case cited above is extracted as under: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 support of claim of foreign tax credit on 18.04.2020. The revised return of income was processed by Centralized Processing Centre (CPC) electronically and intimation u/s 143(1) of the Act on 28.05.2020 was passed disallowing the claim of FTC. 5. The Assessee filed a rectification application before the AO on 15.06.2020 & 25.02.2021 and submitted that 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. However, the Board does not have power to prescribe a condition or provide for disallowance of FTC. The procedure prescribed in Rule 128 should therefore be interpreted in this context. Rule 128 is therefore a procedural provision and not a mandatory provision. 10. It was further submitted that Rule 128(9) provides that Form 67 should be filed on or before the due date 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 provisions of section 90(2) of the Act, where the Central Government of India has entered into a DTAA, the provisions of the Act would apply to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. Reliance in this regard is placed on the following cases (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 noncompliance of any procedural p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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