TMI Blog2023 (11) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... icable to AO and not to the appellate authority. We are of the view that assessee's claim should have been considered and appropriate relief in accordance with law may be provided. In view thereof, we set aside the matter to the file of the Id. AO to consider the assessee's claim afresh by providing adequate opportunity of being heard. Also decided in Juan Miguel Guerrero Ferrer [ 2023 (9) TMI 1401 - ITAT JAIPUR] as held neither section 90 nor DTAA provides that FTC shall be disallowed for non compliance with any procedural requirements. Since FTC is assessee s vested right as per Article 22(2) of the DTAA read with section 90 and thus same cannot be disallowed for non compliance of procedural requirement that is prescribed in the Rules. Rule 128 is a procedural provision and not a mandatory provision - it provides that Form 67 should be filed on or before the due date of filing the return of income as prescribed u/s 139(1) - said Rule nowhere provides that if the said Form 67 is not filed within the above stated time frame, the relief as sought by the assessee under section 90 of the Act would be denied. In case the intention of the Act or Rule was to deny the FT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payment in foreign country. 2. All the grounds so raised by the assessee are related to the solitary issue of related to the denial of relief u/s 90/90A of the Income Tax vis a vis credit for foreign taxes paid amounting to Rs. 4,56,453/- by the ld. CIT(A). In this case, it is noted that the AO vide order dated 21-01-2023 passed the rectification order u/s 154 of the Act and thus disallowed a sum of Rs. 4,56,453/- being foreign tax credit/ relief u/s 90 of the Act. The brief facts of the case on hand is that the assessee being resident of India during F.Y. 2019-20 has filed ITR for A.Y. 2020-21 on 08- 01-2021 having acknowledgement number 132849670080121 by declaring total income of Rs. 87,35,760/-. Total income consists of 1. Salary income from India Rs. 41,34,778/-, 2. Salary from overseas employment of Rs. 61,45,520/-, 3. Short term capital gain from unquoted shares of Rs. 1,192/-, 4. Income from other sources of Rs. 29,743/-. Total tax paid including interest amount is Rs. 30,81,238/- out of which adjustment of tax relief u.s 90 of Rs. 77,679/- and TDS of Rs. 7,45,838/-. The assesee went to Singapore in November 2020 and joined In Mind Cloud Pte. Limited. He has earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed an order u/s 154 without giving benefit of additional tax relief u/s 90 of Income tax Act 1961. 3. Being aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A) who dismissed the appeal of the assessee with following narration. 16. It is undisputed fact that the appellant had paid taxes of withheld by its employer in Singapore. The genuineness of tax payment is not doubted by the AO, CPC in the rectification order. Since there is a genuineness in the tax payment the same cannot be allowed unless a suitable claim is made in the return of income by following the due procedures within the time limits allowed by the Income Tax Act. There are some other ways through which the assessee could have vented out his grievance to obtain the relief as per the provision of the Act. The same will be discussed in the subsequent paragraphs. 17 18. Without going to much debate, the DTAA cannot allow the assessee to make a claim beyond time allowed. If such a claim is allowed the person not claiming the FTC, similar benefits has to be extended to the appellant also. DATA come into the picture only when the return is filed by the appellant with ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that unless otherwise expressly provided, income cannot be taxed twice as it is neither valid nor just to tax the income twice. Therefore, the benefit of DTAA should be given to the assessee in the form of tax relief u/s 90 of Income tax Act 1961 as the income has been offered for tax in both the country i.e. Singapore and India. Further a procedural law should not ordinarily be construed as mandatory, The procedural law is always subservient to and is in aid to justice. It is submitted that filing of Form 67 as per the provisions of section 90/90A read with Rule 128(9) is a procedural law and should not control the claim of Foreign Tax Credit (FTC) as 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. 5. On the other hand, the ld. DR relied on the order of the ld. CIT(A). 6. We have heard both the parties and perused the materials available on record. The bench noted that the assessee has filed the return of income and at the time of filling the ITR the assessee was not available with the information of the claim of taxes paid in the ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the same have been rejected merely on the ground that the same is not claimed in the original return of income. The Jaipur bench has decided vide order dated 27-09- 2023 in IT(IT)A No. 12/JP/2023 for the assessment year 2021-22 in the case of Juan Miguel Guerrero Ferrer vs DCIT wherein the relevant observation as made by this bench is reproduced as under:- 5. We have heard the ld. Counsels of both the parties. We have also perused the material placed on record and also judgments cited by the respective parties. Under this ground of appeal, the assessee has filed Form 67 for claiming relief under section 90 of the IT Act. The said form was filed by the assessee on 28.12.2022 and the Income Tax Return was filed as on 08.09.2021 claiming relief under section 90/90A of the IT Act of Rs. 37,41,228/-. It is an undisputed fact that the assessee has got salary from his employer in Spain and due tax has been deducted by the employer. As per Article 15 of Double Taxation Avoidance Agreement (DTAA) with country Spain, the tax payable by assessee in that country is eligible for relief under section 90 of the Income Tax Act, 1961 to the assessee. The said relief was denied by the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompliance with any procedural requirements. Since FTC is assessee s vested right as per Article 22(2) of the DTAA read with section 90 and thus same cannot be disallowed for non compliance of procedural requirement that is prescribed in the Rules. 5.2. In my view, section 295 sub section (1) of the Act provides powers to the CBDT to prescribe Rules for various purposes. Section 295 sub section (2) sub clause (ha) gives power to the Board to issue Rules for FTC. The relevant extract is as follows :- (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 the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act; Thus, in this way the Board has power to prescribe procedure for granting FTC. Therefore, in my view the procedure prescribed in Rule 128 should be interpreted in this context. Therefore, Rule 128 is a procedural provision and not a mandatory provision. The said rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and the same cannot be disallowed for mere delay in compliance of a procedural provision. 5.3. 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. While reaching to this conclusion, I further strengthen my view by relying upon the decision in the case of Brinda Rama Krishna vs. ITO 135 taxmann.com 358 wherein the Coordinate Bench of the Bangalore Tribunal had directed the Revenue to allow relief of FTC under section 90 of the Act, wherein Form 67 was filed after the prescribed due date. The ratio of the said decision in the case of Brinda Rama Krishna vs. ITO (supra) was further followed in another case decided by the Coordinate Bench of the Bangalore Tribunal in the case of 42 Hertz Software India Pvt. Ltd. vs. ACIT in IT Appeal No. 29 of 2021. On the contrary, I respectfully with all humility disagree with the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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