TMI Blog2022 (10) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... m No.67 was filed along with the return of income by the assessee and not after the commencement of the scrutiny proceedings by the AO after a delay of more than 2 years, as was the facts in the case decided. We are therefore of the view that the said decision rendered by the Visakapatnam Bench is not applicable to the facts of the present case and the other decisions taking a view in favour of the assessee are applicable. The said decision also does not consider the effect of DTAA and Sec.90 of the Act, vis- -vis the provisions of Rule 128(9) of the Rules and as to whether the Rules can override the Act. Therefore, we hold that the assessee is entitled to FTC and the AO is directed to allow the same. - Decided in favour of assessee. - ITA No. 743/Bang/2022 - - - Dated:- 29-9-2022 - SHRI N. V. VASUDEVAN , VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER Assessee by : Shri. V. Sridhar , CA Revenue by : Shri. Gudimella V. P. Pavan Kumar , JCIT ( DR ) ( ITAT ) , Bengaluru ORDER Per N. V. Vasudevan , Vice President This is an appeal filed by the assessee against the order dated 01.07.2022 passed by the National Faceless Appeal Centre (NFAC) per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed return of income along with Form No. 67 belatedly on 30/01/2021 whereas the due date for filing return of income u/s.139(1) was 31.07.2020. The return of income so filed was processed u/s 143(1) of the Act by the AO/CPC. The intimation order u/s 143(1) of the Act dated 26/11/2021 was issued to the Assessee, wherein relief u/s 90 of Rs.7,61,129/- was not allowed due to failure on the part of the appellant to file form no. 67 before the due date specified for furnishing the return of income under subsection (1) of section 139. 4. Against the said intimation u/s.143(1) dated 26.11.2021, the Assessee filed appeal before the CIT(A), the first appellate authority. It was the plea of the Assessee that though the Assessee did not file the return of income and Form No. 67 within the due date of filing the return of income under Section 139(1) of the Act. It was filed return of income along with Form No. 67 before the time limit allowed under Section 139(5) of the Act. Further, Form No. 67 along with the return of income was available before the AO when the intimation order u/s 143(1) of the Act dated 26/11/2021 was passed. The Assessee further contended that he is entitled to avail th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er specified for furnishing such return of income. 6. From the plain reading of Rule 128(9) of the IT Rules, it is clear that the statement in Form-67 shall be furnished on or before the due date specified for furnishing the return of income under subsection( 1) of section 139 of the Act. Therefore, we are of the considered view that since the word ''shall has been used in the Rule 128(9) that it is mandatory in nature and not directory as claimed by the Ld. AR. We therefore find no infirmity in the order of the Ld. CIT(A), NFAC and hence no interference is required. 7. In the result, appeal filed by the assessee is dismissed. The first appellate authority held that in light of above decision of the Hon'ble ITAT, Visakhapatnam analyzing the rule 128(9) of the Act, it is clear that requirements of the Rule 128 for claiming FTC regarding filing of form 67 before the due date specified for furnishing of the return of income under sub-section (1) of section 139 is mandatory in nature. It is undisputed fact that Assessee failed to file ITR as well as form no. 67 before the due date specified for furnishing of the return of income under sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India. One of the requirements of Rule 128 for claiming FTC is provided by Rule 128 (8) (9) of the Rules and the same reads thus: (8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee, namely:- (i) a statement of income from the country or specified territory outside India offered for tax for the previous year and of 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment 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 24 of India Australia DTAA provides for credit for foreign taxes. Article 24(4)(a) is relevant in the present context. Same is extracted below: 4. In the case of India, double taxation shall be avoided as follows: (a) the amount of Australian tax paid under the laws of Australia and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of India in respect of income from sources within Australia which has been subjected to tax both in India and Australia shall be allowed as 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedural norm does not extinguish the substantive right of claiming the credit of FTC. Reliance was 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) wherein it observed that: 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricted in scope to mistakes apparent on the face of the record. 15. In his rejoinder, the learned counsel for the Assessee submitted that Form No.67 was available before the AO when the intimation u/s.143(1) of the Act dated 28.5.2020 was passed. He pointed out that the AO or the CIT(A) did not dismiss the Assessee application for rectification u/s.154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No.67 before the due date u/s.139(1) of the Act was fatal to the claim for FTC. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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