TMI Blog2023 (2) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... igures. Since the issue in these appeals are similar, first I am taking ITA No.25/Bang/2023 for adjudication and the decision of this appeal shall apply mutatis mutandis in ITA No.26/Bang/2023. Hence, I reproduce the grounds in ITA No.25/Bang/2023 as follows: Foreign tax credit has been disallowed on the grounds that filing of form 67 within due date is a pre-condition for claiming foreign tax credit. This assumption is not in line with the decision of this Honourable Tribunal in the case of Ms. Brinda Ramakrishna. ITA No.454/Bang2021 vide its order dated 17.11.2021. This decision formed part of the grounds of appeal. 2. The brief facts of the case are that the assessee filed return of income on 28.9.2018 declaring total income of Rs.44,16,876/- and deduction claimed under Chapter VIA of Rs.38,694/-. The return was processed by Central Processing Centre (CPC) on 28.2.2019. The tax payment was made by the assessee of Rs.7,87,688/- and relief was claimed u/s 90/90A of Rs.2,46,567/-, which was not granted by the CPC only because the Form No.67 was not filed within the due date and demand was raised of Rs.2,49,030/- against which the assessee filed application u/s 154 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort] dated 11.6.2020 on the reason that assessee has not filed the Form No.67 along with return of income so as to claim the foreign tax credit. However, the same has been filed before the Ld. CIT(A) on 22.9.2018. The assessee has made the contention before Ld. CIT(A) that assessee has offered the foreign income of Rs.2,01,024/- and also paid tax on it at Rs.63,342/- and levying of additional tax of Rs.28,431/- is amounting to double taxation. In our opinion, the plea of the assessee is justified. The assessee has filed the copy of Form No.67 before Ld. CIT(A). He ought to have given direction to give credit for foreign tax which has been paid as per Form 67. 5. Further, we note that on identical issue, This Tribunal in the case of Brinda Rama Krishna (in ITA No. 454/Bang/2021 for AY.2018-19), order dated 17.11.2021 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sub-rule (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 taxmann.com 16 (Allahabad) CIT, Central Circle vs American Data Solutions India (P.) Ltd [2014] 45 taxmann.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 bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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. 17. In the result, the appeal is allowed. 6. In view of the above order of the Tribunal, we direct the AO to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT(A) after due verification. 7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. 6. Respectfully following the above judgement, I direct the Assessing Officer to give foreign tax credit as per Form No.67 filed on 20.8.2020 before the ld. CIT after due verification and appeal is accordingly allowed for statistical purposes. 7. Since the issue involved in ITA No.26/Bang/2023 is identical in nature, therefore, the same ratio shall apply as decided in ITA No.25/Bang/2023 in this case. Accordingly, this appeal is als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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