TMI Blog2022 (10) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... a, D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by the assessee is directed against order of CIT(A), NFAC, Delhi dated 7.6.2022 for the assessment year 2018-19. The assessee has raised following grounds of appeal:- 1. Foreign tax credit has been disallowed on the grounds that return of income for AY 2018-19 was not filed within the due date. This expectation is not in line with the rule 128(1) of the IT Act, 1961. 2. 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/Bang/2021 vide its order dated 17-Nov-2021. 2. Facts of the issue are that the Grounds No. 1 to 5 of the present appeal are against the order u/s. 143(1) of the Incometax Act,1961 ['the Act' for short] passed by the AO, CPC Bengaluru in disallowing the Foreign Tax Credit of Rs.28,431/- u/s. 90/90A of the Act and raising a demand of Rs. 38,540/- for A.Y. 2018-19. 2.1 In the present appeal, it is seen that the assessee has filed his return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r A.Y. 2018-19 within the due date of filing of return of income (extended due date i.e. on or before 31.08.2018) and also Form 67, the AO, CPC has rightly disallowed the claim Foreign Tax Credit. Hence, no interference is called for in the action of the AO in disallowing the claim of Foreign Tax Credit. Therefore, the Grounds No. 1 to 5 raised by the assessee are hereby dismissed. 4. We have heard the rival submissions and perused the materials available on record. The claim of the assessee has been denied while processing return of the assessee u/s 143(1) of the Income-tax Act,1961 ['the Act' for short] 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign tax deducted or paid on such income in Form No.67 and verified in the manner specified therein; (ii) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee,- (a) from the tax authority of the country or the specified territory outside India; or (b) from the person responsible for deduction of such tax; or (c) signed by the assessee: Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by,- (A) an acknowledgement of online payment or bank counter foil or challan 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax; It was submitted by him that section 90 of the Act read with Article 24(4)(a) provides that Australian tax paid shall be allowed as a credit against the Indian tax but limited to proportion of Indian tax. Neither section 90 nor DTAA provides that FTC shall be disallowed for non-compliance with any procedural requirements. FTC is Assessee s vested right as per Article 24(4)(a) of the DTAA read with Section 90 and same cannot be 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further reliance was placed on the decision of the Hon ble Supreme Court, in the case of Sambhaji and Others v. Gangabai and Others, reported in (2008) 17 SCC 117, wherein it has been 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. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. It was submitted that filing of Form 67 as per the provisions of section 90 read with 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 Merc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. 16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold 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. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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