TMI Blog2024 (2) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... t and hence to be construed only directional in nature and not mandatory. It is trite law that violation of procedural norms does not extinguish the substantive right of claiming the FTC credit. There are many sections in the Act which specifically deny deduction or exemption or relief in case the return/form is not filed within prescribed time limits such as sections 80AC, 80-1A(7), 10A(5) and 10A(5) etc, wherein there is specific provision for disallowance of deduction/exemption if audit report is not filed along with the return. We find that various Hon ble High Courts have taken a view that filing of audit report is directory and not mandatory. Such language is not used in Rule 128(9) of the Rules. Therefore, such condition cannot be read into Rule 128(9) of the Rules. Assessee appeal allowed. - Shri Amit Shukla, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Shri Harish Chaudhary, Ca, Shri Mohit Chaudhary, CA And Ms. Neetu Jain, CA For the Revenue : Shri Vivek Vardhan, Sr. DR ORDER PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.3420/Del/2023 for AY 2021-22, arises out of the order of the National Faceless Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x return filed on 15.01.2022 itself under the relevant column schedule FSI. For the sake of convenience, the provisions of Rule 128 , 128(1), 128(2), 128(8) and 128(9) of the Income Tax Rules (hereinafter referred to as the Rules ) are reproduced hereunder:- 128. (1) An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding 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. (2) The foreign tax referred to in sub-rule (1) shall mean, (a) in respect of a country or specified territory outside India with which India has entered into an agreement for the relief or avoidance of double taxation of income in terms of section 90 or section 90A, the tax co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore Bench in the case of Brinda Ramakrishna Vs. ITO 193 ITD 840 is as under:- 4. The Assessee claimed FTC of Rs. 4,73,779/- u/s. 90 of the Act read with Article 24 of India Australia tax treaty ( DTAA ) in a revised return of income filed on 31.8.2018. The Assessee had not filed the Form 67 before filing the return of income. On realising the same, the Assessee filed Form 67 in support of claim of foreign tax credit on 18.04.2020. The revised return of income was processed by Centralized Processing Centre (CPC) electronically and intimation u/s 143(1) of the Act on 28.05.2020 was passed disallowing the claim of FTC. 5. The Assessee filed a rectification application before the AO on 15.06.2020 25.02.2021 and submitted that credit for FTC as claimed in the return should be given. In the rectification order dated 10.03.2021, the AO upheld the action on the ground that the Assessee has failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) of the Rules. 6. On appeal by the Assessee, the CIT(A) vide Order dated 03.09.2021 confirmed the Order of AO. The CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he foregoing power, such rules may provide for all or any of the following matters (ha) the procedure for granting of rehef or deduction, as the case may be, of any income-tux paid in any country or specified territory outside India, under section 90 or section 904 or section 91, against the income-tax payable under this Act, 9. It was submitted that the Board has power to prescribe procedure to granting FTC. However, the Board does not have power to prescribe a condition or provide for disallowance of FTC. The procedure prescribed in Rule 128 should therefore be interpreted in this context. Rule 128 is therefore a procedural provision and not a mandatory provision 10. It was further submitted that Rule 128(9) 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) of the Act. However, the 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 u/s 90 of the Act would be denied. The learned counsel for the Assessee submitted that in case the intention was to deny the FTC, either the Act or the Rules would have specifically prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard was placed on the following Fases: CIT vs Axis Computers (India) (P.) Ltd [2009] 178 Taxman 143 (Delhi) PCIT, Kanpur vs Surya Merchants Ltd [2016] 72 laxmann.com 16 (Allahabad) CIT. Central Circle vs American Data Solutions India (P.) Ltd [2014] 45 taxmann.com 379 (Karnataka) CIT-II vs Mantec Consultants (P.) Ltd [2009] 178 Taxman 429 (Delhi) CIT vs ACE Multitaxes Systems (P.) Ltd [2009] 317 ITR 207 (Karnataka). 13. It was submitted that as per the provisions of section 90(2) of the Act, where the Central Government of India has entered into a DTAA, the provisions of the Act would apply to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. Reliance in this regard is placed on the following cases and circulars: Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) CIT v Eli Lily Co (India) P Ltd (2009) 178 Taxman 505 (SC) GE India Technology Centre P Ltd v CIT (2010) 193 Taxman 234 (SC) o Engineering Analysis Centre of Excellence P Ltd v CIT (2021) 125 taxmann.com 42 (SC) (Pg 106-109 of PB 2-Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned DR in this regard. 17. In the result, the appeal is allowed. 6. We find that the issue in dispute is governed by the provisions of Article 25 of DTAA between India and Bangladesh which reads as under:- ARTICLE 25 of DTAA Subject to the provisions of Indian tax laws regarding the allowance as a credit against Indian tax of tax payable in any country other than India the Bangladesh tax payable under the laws of Bangladesh and in accordance with this Convention, whether directly or by deduction in respect of income from sources within Bangladesh which has been subjected to tax both in Bangladesh and India shall be allowed as a credit against Indian tax payable in respect of that income. The credit shall not, however, exceed that proportion of Indian tax which the income from sources within Bangladesh bears to the entire income subject to Indian tax. 7. We find that Section 90 of the Act read with Article 25 provides that tax paid in Bangladesh shall be allowed as a credit against the Indian tax but limited to proportion of Indian tax. Neither section 90 of the Act nor DTAA provides that FTC shall be disallowed for non-compliance with any procedural requ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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