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TMI Blog2025 (2) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer (AO) be directed to grant the FTC of Rs. 13,08,667 as the action of the Ld. AO as well as the Ld. CIT(A) is contrary to Section 90 of the Act, read with Article 23 of the India Denmark Double Taxation Avoidance Agreement ((DTAA'), read with Circular 333 dated 2nd April 1982, read with various orders of the Hon'ble Income Tax Appellate Tribunal including the following: Ms. Brinda Ramakrishna vs. The Income Tax Officer, Ward 5(3)(1), Bangalore (ITA. No. 454/Bang/2021) Bhaskar Dutta Vs DCIT Int. Tax-1(2)(2), New Delhi. (ITA No.1869/Del/2022) Sonakshi Sinha Vs Commissioner of Income-tax (Appeals) National Faceless Appeal Centre (NFAC) Delhi (ITA No. 1704/Mum/2022) The Appellant craves leave to add, amend, alter, substitute, withdraw all or any of the above Grounds of Appeal anytime either before or during the hearing of the Appeal." 2. The facts giving rise to the present appeal are that the assessee is aggrieved for not giving set off of Foreign Tax Credit ("FTC"). The assessee in this case had filed an application seeking rectification of the adjustment made u/s 143(1) of Income Tax Act, 1961 (hereinafter referred as to the "Act") thereby declining the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit were put in place since the year 2017 and it was clearly emphasized therein that & was mandatory to file Form 67 on or before the specified due date for furnishing of income u/s. 139(1) of the Act. It was therefore, incumbent upon an assessee seeking to claim Foreign Tax Credit to file the return of income as well as Form 67 on or before the prescribed due date under section 139(1) of the income Tax Act, 1961. This position continues to apply for all cases in which claim for Foreign Tax Credit has been made till end of FY.2021-22. 4.8. it is further seen that some relaxations in the above requirement have been granted subsequently by CBDT but only to those claims of FTC that were made during FY.2022-23, for which the provisions of Rule 128 have been amended with effect from 01.04.2022, vide CBDT Notification 100 of 2022 dt Aug 18 2022 whereby CBDT has extended the time limit for furnishing Form No. 67 at the end of the AY in which the foreign sourced income is offered to tax or is assessed to tax in India, where the return for such AY has been furnished within the time-limit specified under Section 139(1)/139(4); Further, where an updated return is filed under Section 139(8A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Extraordinary, Part-ll, Section-3, Subsection (ii) vide number S.O. 969 (E) dated the 26. March, 1962 and last amended vide notification number G.S.R 634 (E) dated 17 August, 2022." 4.10. As the amendment in the rule is with a specified anterior date effective from 01.04.2022, it is not applicable to the appellant's case in which the claim for FTC was made prior to the effective date. The pre-amended sub rule (9) as existed then for the relevant assessment year 2019-20 is, therefore, squarely applicable to appellant's case. The case laws cited by the appellant which were rendered in the pre-amendment period are therefore, distinguishable. 4.11. On the similar issue of delay in filing of Form 10B and condonation thereof vis a vis the circulars issued by CBDT in exercise of powers vested under section 119(2)(a) of the Income Tax Act, 1961 came up before the Hon'ble High Court of Judicature at Bombay in the case of Little Angels Education Society Vs Union of India and Others and Rev. c. F. Andrews Education Society (Regd) Vs Union of India and others in Wirt Petition No.1061 & 1288 of 2020 respectively. The Hon'ble High Court, after considering the above circulars, has upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not being a Commissioner (Appeals), to admit an application or claim for any exemption, deduction, refund or any other relief under the Act after the expiry of the period specified under the Act for making such application or claim and deal with the same on merit in accordance with law. Thus, in an appropriate case CBDT can pass a general order of @ special order; by such an order & can authorize any income tax authority not being a Commissioner (Appeals) which would include Commissioner of Income Tax (Exemptions); to admit an application or claim for any exemption etc. after expiry of the period specified under the Act; and to deal with the same on merit in accordance with law. 20. Having noticed the above, we may now examine Circular No.2/2020 dated 03.01.2020 issued by the CBDT. The subject of the circular is condonation of delay under section 119(2)(b) of the Act in filing of Form No.108 for the assessment year 2018-19 and subsequent years. Referring to the earlier circulars issued by the CBDT, it was noticed that the delay in filing Form No.10B for the assessment year 2016-17 and assessment year 2017-18 in all such cases where the audit report for the previous year had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 Fixing a period of one year's delay i.e., 365 days of delay for condonation of delay in filing Form No.10B for the assessment year 2018-19 and onwards cannot be said to be arbitrary or irrational. Therefore, the general order passed by the CBDT in this regard under section 119(2)(b) cannot be faulted." 4.12. Thus, once a specific course of action has been laid down by the competent authority under the Act, it is not open for the subordinate authorities to ignore such procedures. it may be beneficial to refer to the decision of the Hon'ble Supreme Court in the case of Barium Chemicals Limited and Another v. The Company Law Board and Another AIR 1967 SC 295 wherein it is held at paragraph 36 as follows: *..Prima facie, a discretion conferred by a statute on any authority is intended to be exercised by that authority and by no other." 4.13. The discretion to condone delay in filing of Form 67 does not vest with the AO or CPC or any other subordinate authority except to the extent as provided for by the CBDT in exercise of its powers conferred under the Act. Clearly the case of the appellant does not fall within such relaxation provided for by CEDT. For the detailed reasons as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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." 7. Further, the assessee has placed reliance on the decision of Co-ordinate Bench of this Tribunal in ITA. No.1869/Del/2022 in the case of Bhaskar Dutta vs DCIT, the relevant contents are reproduced as under: - "13. Even, otherwise also, the assessee has a strong case on merit as well. In case of M/s.Brinda Ramakrishnan vs. ITO, supra, the Tribunal while dealing with an identical issue has held as under: "16. I have given a careful consideration to the rival submission. 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 the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income Tax Rules 1962 provides that 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 sub-section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore - Trib.) wherein following its earlier order in the case of Ms. Brinda Rama Krishna v.ITO [2022] 135 taxmann.com 358 (Bang - Trib) it was held that "one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclined to agree with the view expressed in the decisions cited by learned counsel appearing for the assessee. 16. In view of the aforesaid, we direct the Assessing Officer to allow foreign tax credit to the assessee. Ground is allowed." 8. Further, the Co-ordinate Bench of this Tribunal in ITA. No.1704/Mum/2022 in the case of Sonakshi Sinha vs CIT(A) also ruled in favour of the assessee by observing as under: - "12. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed. 013. Other grounds of appeal are also revolving around the issue of claim of foreign tax credit and therefore those are allowed. 014. Accordingly, appeal of the assessee is allowed." 9. Similar view has been expressed by the Co-ordinate Bench of this Tribunal in the case of Vinodkumar Lakshmipathi vs CIT(A) (2022) 145 taxmann.com 235) Bangalore, also in favour of the assessee by observing as under: - "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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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