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2025 (6) TMI 307 - AT - Income TaxDenial of benefit of the foreign tax credit - Form 67 was filed after the due date of filing of Return of Income - mandatory OR directory obligation - HELD THAT - The appellant is entitled to FTC for the following reasons - a) The Double Taxation Avoidance Agreement override the Provisions of Income Tax Act as they are more beneficial to the appellant as per section 90(2) of the I.T. Act. b) Hon ble Madras High Court in the case of Duraiswamy Kumarawamy 2023 (11) TMI 1000 - MADRAS HIGH COURT held that the Rule regarding filing FTC is only directory and not mandatory and hence it can be filed after the filing of Return of Income to claim FTC and appellant is entitled for credit mentioned in FTC. As in the case of John Arunkumar Diaz 2024 (2) TMI 838 - ITAT MUMBAI also held that filing of Form 67 and the related Rule is only directory and not mandatory. Thus the appellant is entitled to credit as mentioned in FTC. Appeal of appellant is allowed.
The Appellate Tribunal (ITAT Mumbai) adjudicated whether the appellant company could be denied Foreign Tax Credit (FTC) due to late filing of Form 67 after the Return of Income's due date. The Ld. CPC and CIT(A) denied FTC relying on Rule 128(9), holding it "mandatory in nature and not directory." The appellant relied on precedents, notably the Madras High Court decision in Duraiswamy Kumarawamy (W.P No. 5835 of 2022), which held that Rule 128(9) is "only directory and not mandatory" and Form 67 can be filed anytime before assessment completion. The Mumbai Tribunal in John Arunkumar Diaz v. DCIT (ITA No. 3647/Mum/2023) similarly held the rule directory.Key legal reasoning included: - Section 90(2) of the Income Tax Act mandates that the Double Taxation Avoidance Agreement (DTAA) overrides the Act's provisions if more beneficial to the taxpayer. - Following judicial discipline and binding precedents, the appellant was entitled to FTC despite late filing of Form 67.Accordingly, the ITAT allowed the appellant's appeal, affirming entitlement to FTC.
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