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TMI Blog2025 (3) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of taxes in UK as per the provision of section 90/90A of the Act. 3. However, the CPC while processing the return as per the provision of section 143(1) of the Act disallowed the claim of the assessee for foreign tax credit as Form-67 prescribed under rule 128 of the Income Tax Rules was not filed on or before the expiry date to file return of income under section 139(1) of the Act. 4. The aggrieved assessee preferred an appeal before the learned CIT(A). 5. The assessee before the learned CIT(A) furnished the detail of salary received in UK, return of income filed and taxes paid in UK, reconciliation sheet showing UK income included in the income offered to tax in India. The assessee accordingly claimed that he is eligible to claim the credit of said foreign tax payment and same cannot be disallowed merely on the reasoning that Form-67 was not filed on or before the due date to file the return of income u/s 139(1) of the Act. The assessee to support his claim placed reliance on the decision of this Tribunal in the case of Ms. Brinda Ramakrishna in ITA No. 454/Bang/2021. 6. However, the learned CIT(A) held that to claim the credit of foreign tax, the assessee is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 has already been adjudicated by various coordinate benches of the Tribunal, wherein it has been consistently held that the filing of Form 67 is a directory requirement and not a mandatory precondition for claiming FTC. This Tribunal in in the case of Brinda Rama Krishna in ITA No. 454/Bang/2021 for AY.2018-19 vide order dated 17.11.2021 has 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, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. 9.3 The relevant findings of the Coordinate Bench in the above stated case is extracted as under: "2. The Assessee is an individual and during the previous year relevant to AY 2018-19 an ordinary resident in India. The Assessee worked with Ernst & Young Australia from 20.11.2017 till 16.05.2019. Since her global income was taxable in India, the Assessee offered to tax salary income earned for services rendered in Australia for the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 CIT(A) held that the Assessee has not filed Form 67 before the time allowed under section 139(5) of the Act, and therefore Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 provided that the FTC would be disallowed if the assessee does not file Form 67 within the due date prescribed under section 139(1) of the Act. It was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Circle vs American Data Solutions India (P.) Ltd [2014] 45 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 (SC) GE India Technology Centre P Ltd v CIT (2010) 193 Taxman 234 (SC) Engineering Analysis Centre of Excellence P Ltd v CIT (2021) 125 taxmann.com 42 (SC) (Pg 106-109 of PB 2-Para 25 & 26) CBDT Circular No 333 dated 2/4/82 137 ITR (St.) It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for noncompliance of any procedural provision. As the provisions of DTAA override the provisions of the Act, the Assessee has vested right to claim the FTC under the tax treaty, the same cannot be disallowed for mere delay i ..... 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