TMI Blog2022 (9) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... f the DTAA read with section 90 and thus same cannot be disallowed for non compliance of procedural requirement that is prescribed in the Rules. The procedural law is always subservient to and is in aid to justice. Even otherwise, since there are no conditions prescribed in DTAA that FTC can be disallowed for non compliance of any procedural provision, therefore, the provisions of DTAA override the provisions of the Act. As the assessee has vested right to claim the FTC under the tax treaty and the same cannot be disallowed for mere delay in compliance of a procedural provision. See Sambhaji Ors. vs. Gangabai Ors. [ 2008 (11) TMI 393 - SUPREME COURT] Even otherwise, the said Form 67 filed by the assessee before the tax authorities was available before the AO when the intimation under section 143(1) of the Act dated 25.11.2021 was passed. Therefore, in such circumstances, in my view, there were no reasons with the tax authorities for making disallowance when the said Form 67 was very much available with the AO at the time of framing the assessment order. Thus assessee is entitled for the credit of FTC under section 90 - Decided in favour of assessee. - Hon ble Shri Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his order- 3.3 Since the appellant has failed to submit Form 67 within the stipulated time limit, the AO while passing the intimation order disallowed the claim of Foreign Tax Credit u/s. 90 of the Act. Hence, I agree with the action of the AO in disallowing the claim of Foreign Tax Credit to the appellant, since the appellant has failed to submit Form 67 within the due date, which was required by the appellant to file the same as per the the provisions of I.T. Act. Therefore, this ground of appeal is hereby dismissed. There is no dispute that the assessee is entitled to claim relief u/s 90 but the disallowance was confirmed on the sole ground that the relevant form 67 prescribed under rule 128(8) was not filed within the time stipulated under sub rule 9 of rule 128. (PB-24). It is submitted that disallowance of FTC is bad in law. The section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. Article 22 of India Finland DTAA provides for credit for foreign taxes. Article 22(2) is relevant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rame, the relief as sought by the assessee under section 90 of the Act would be denied. In case the intention was to deny the FTC, either the Act or the Rules would have specifically provided that the FTC would be disallowed if the assessee does not file Form 67 within the due date prescribed under section 139(1) of the Act. It is submitted that that there are many sections in the Act which specifically deny deduction or exemption or relief in case the return/audit report is not filed within prescribed time. Please refer to section 32AB(5), 80HHC(4), 80AC, 80-IA(7), 10A(5) and 10B(5). Such language is not used in Rule 128(9). Therefore, such condition cannot be read into Rule 128(9). It is further submitted that Filing of Form 67 is a procedural/directory requirement and is not a mandatory requirement. Violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. Reliance is placed on the decision of the Hon'ble Supreme Court, in the case of Mangalore Chemicals Fertilizers Ltd. v. Deputy Commissioner, 1992 Supp (1) Supreme Court Cases 21 : 1991 TaxPub(EX) 624 (SC) wherein it observed that (Case PB-34) :- 'The mere fact that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assing order- The Form No. 67 was available before the assessing officer when the intimation under section 143(1) of the Act dated 25/11/2021 was passed. There is no reason for making disallowance when the form 67 was available with the ld. AO at the time of framing the assessment order. FTC Relief allowed even if the form 67 was filed late7 In case of Brinda Rama Krishna vs ITO 135 taxmann.com 358 the Hon ble Banglore Bench (SMC) of ITAT ( Case PB 1 to 8) has directed the revenue to allow relief of FTC u/s 90 where the form 67 was filed after the prescribed due date after holding that- (Case PB-8) (para 16 of judgment) Rule 128(9) does not provide for disallowance of FTC in case of delay in filing form 67 Filing of form 67 is not mandatory but a directory requirement, and DTAA overrides the provisions of Act and Rules can not be contrary to the Act. The ratio of the above judgment has been followed in another case decided by Double Bench of Hon ble Banglore Bench in case of 42 Hertz Software India (P) Ltd vs ACIT (IT Appeal no 29 of 2021) [2022 Taxpub(DT) 1975] (Case PB- 9 to 12) The facts of our case are similar to the above two judgments. Under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the sole ground that the relevant form 67 prescribed under section 128(8) was not filed within the time stipulated under sub rule 9 of Rule 128. It is important to mention here that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. In this regard Article 22 of India Finland DTAA provides for credit for foreign taxes. The relevant portion of sub clause (2) of Article 22 is reproduced below :- 2. In India double taxation shall be eliminated as follows :- Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Finland, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Finland. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Finland. And since as per section 90 of the Act read with Article 22 sub clause (2) provides that Finland In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. vs. Deputy Commissioner, (1992) Supp (1) Supreme Court Cases 21 wherein the Hon ble Supreme Court has held as under :- The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. Apart from the above decision, I further rely upon the decision of Hon ble Supreme Court in the case of Sambhaji Ors. vs. Gangabai Ors., (2008) 17 SCC 117 (SC) wherein it was held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. According to Hon ble Supreme Court, the procedures are handmaid and not the mistress. It is a lubricant and not a resistance. Thus, a procedural law should not ordinarily be construed as mandatory. The procedural law is always subservient to and is in aid to justice. Even otherwise, since there are no conditions prescribed in DTAA that FTC can be di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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