2023 (9) TMI 1209 - AT - Income Tax

Foreign tax credit claimed u/s 90/90A denied - Rejection of rectification application on the ground that Form No. 67 was not furnished before the due date as provided u/s 139(1) in compliance to Rule 128(9) - HELD THAT - As decided in the case of Shri Baburao Atluri 2022 (12) TMI 525 - ITAT HYDERABAD after considering various decisions has allowed the foreign tax credit although there was delay in filing of such Form 67 beyond the due date of filing of the return wherein as held that FTC cannot be denied to the assessee where the assessee filed FTC in Form No. 67 although belatedly since filing of such Form 67 is not mandatory but directory in nature. Thus we direct the Assessing Officer to allow the foreign tax credit after due verification. Grounds raised by the assessee are accordingly allowed.

Summary

Issues:
The judgment involves the disallowance of relief claimed u/s 90/90A under the Income Tax Act, 1961.

Disallowed Relief u/s 90/90A:
The appellant, an individual deriving income from various sources including Capital Gain from the USA, filed a return of income for A.Y. 2019-20. The CPC disallowed the relief of Rs. 58,69,594/- claimed u/s 90/90A. The Assessing Officer rejected the rectification request as Form 67 was filed beyond the due date. The CIT (A) upheld this decision citing non-compliance with Rule 128(9) regarding the filing of Form 67 before the due date. The appellant appealed to the Tribunal, arguing that similar relief had been allowed in other cases despite delayed filing of Form 67.

Tribunal's Decision:
The Tribunal considered the arguments and relevant case laws presented by both sides. Referring to a previous case, the Tribunal held that the filing of Form 67 for foreign tax credit is directory, not mandatory. It noted that the delay in filing Form 67 was due to circumstances beyond the appellant's control, unlike in another case where there was an unexplained delay of over two years. Following the principle of favoring the assessee when two views are possible, the Tribunal directed the Assessing Officer to allow the foreign tax credit of Rs. 58,69,594/- after verification. The grounds challenging the levy of interest u/s 234B & 234C were dismissed as mandatory and consequential. The appeal was partly allowed, and the order was pronounced on 11th May, 2023.