9911796707
TMI Blog2024 (7) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... n 90 on the Income of Rs. 84,53,976/- earned in USA and included in the total Income in the return of Income filed in India without assigning any reason. 2.2 That on the facts and in the circumstances of case and in law, the Ld. CIT(A) erred in sustaining the order passed by the Ld. CPC u/s 143(1) without appreciating the fact that the Ld. CPC failed to appreciate the fact that when overseas Income is included in the total income, the assessee is entitle for relief of overseas taxes paid under section 90 as per applicable double taxation avoidance agreement, if any, or for appropriate tax relief under section 91 of the Act in case there are no such agreements in existence with the respective country." 2. Ld. AR of the assessee has submitted that the assessee is a citizen of USA and presently residing in India. The assessee is about 85 years old and filed her return of income on 29.07.2020. The assessee claimed credit of tax paid in USA of Rs. 20,18,809/- under section 90 of Income Tax Act. However, the CPC while processing return of income u/s 143(1) has denied the claim of credit of tax paid on the income earned in USA due to delay in filing the form 67. On appeal the CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 are carefully considered. It is an admitted fact that Form no.67 has not been filed by the Appellant before the time limit specified u/s. 139(1) for AY 2019-20 and such omission is attempted to be justified by the Appellant on the pretext that filing of Form No.67 is not mandatory relying on certain judgements. With due respect to the judicial authorities who had rendered in favour of the tax payers like that of the Appellant, it is brought on record that filing of Form no.67 is mandatory to claim the benefit of Foreign Tax Credit. 4.3 Taxes are paid in an alien nation, the particulars of which can never be verified by the Income tax Authorities. It is for such reason that Form no.67 which consists of 4 parts has a verification column, affirming that the claim of the FTC to the best of the knowledge and belief of the Appellant is true and correct. Providing credit of FTC in the absence of such verification is not logical while the authorities erred in failing to comprehend that the claims are otherwise not verifiable. Further, Rule 128 incorporates the word "Shall", which imply that filing of Form no.67 before the time limit u/s. 139(1) [now extended to 139(4)] is directory/man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin a period of 8 weeks from the date of receipt of copy of this order." 4.3 Thus, it is clear that the Hon'ble High Court has held that the filing of form no. 67 for claim of FTC in terms of Rule 128 is only directory in nature. Once the assessee has filed this form no.67 then the claim of foreign tax credit of the assessee ought to have been allowed by the CIT(A). The Bangalore Benches of the Tribunal in case of Deepak Shimoga Padmaraju (supra) has considered this issue in para 5 to 6 as under: "5. Further, we note that on identical issue, This Tribunal in the case of Brinda Rama Krishna (in ITA No. 454/Bang/2021 for AY.2018- 19), order dated 17.11.2021 held 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. Therefore, nonfurnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. The findings of this Tribunal are reproduced below: " 2. The Assessee is an individual and during the previous year relevant to AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 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;" 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 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 Merchants Ltd [2016] 72 taxmann.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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 the AO to give credit for foreign tax as per Form 67 filed on 22.9.2018 before Ld. CIT(A) after due verification." 7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. 5. Respectfully following the above judgment, we direct the AO to give credit for foreign tax credit as per Form No.67 filed on 22/10/2022 after due verification. 6. In the result, appeal of the assessee is allowed for statistical purposes." 4.4 Thus, it is clear that Bangalore benches of the tribunal has taken a consistent view on this issue as in the earlier decision in case of Ms. Brinda Ramkrishna vs. ITO (supra) has also considered this issue and held that Rule 128(9) of the Income tax Rules does not provide for disallowance of foreign tax credit in case of delay in filing in form 67 as it is directory requirement not mandatory. Further the DTAA overrides the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
