9911796707
TMI Blog2025 (3) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the assessee declared income under head salary at Rs. 20,19,492/- and after claiming deduction under section 80C and 80D of the Act for Rs. 1,25,984/- declared net taxable income of Rs. 18,93,510/- only. The assessee computed gross tax liability (tax + cess) on the declared income at Rs. 3,91,970/- against which claimed relief under section 90 of the Act, amounting to Rs. 2,34,743/- on account of taxes paid in foreign country namely "Norway". 5. The Centralized Processing Centre (CPC), while processing the revised return under section 143(1) of the Act, disallowed the assessee's claim for foreign tax credit under section 90 of the Act. 6. Aggrieved by the intimation order under section 143(1) of the Act, the appellant assessee preferred appeal before the learned CIT(A)/NFAC. 7. The assessee before the learned CIT(A)/NAFC submitted that during the year under consideration he was employed in the country Norway for 153 days where the employer has deducted withholding tax of Rs. 2,34,743/- only. At the time of filing of original return, the income tax return in the country Norway was not finalized due to the difference in accounting period. Once the income tax in the Norway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Form No. 67 was also submitted on the same date. This delay in submission meant that the appellant did not adhere to the procedural requirements mandated under Rule 128 of Income Tax Rule. The requirement that Form No. 67 must be furnished before or at the time of filing the return is not merely procedural but a substantive requirement to establish the validity of the claim. Since the appellant did not file Form No. 67 within the statutory time limit, the conditions for claiming foreign tax credit under Section 90/90A were not fulfilled. 13. The learned CIT(A) further emphasized that there are no express provisions in the Act that empower any authority to condone the delay in filing Form No. 67. Citing the Supreme Court ruling in State of Uttar Pradesh v. Singhara Singh AIR 1964 SC 358 and Chandra Kishore Jha v. Mahavir Prasad [1999] 8 SCC 266, the ld. CIT(A) reiterated the principle that when a statute prescribes a specific manner for performing an act, it must be done in that manner alone and not otherwise. 14. Further, reliance was placed on the Bombay High Court ruling in Commissioner of Income-tax v. Shivanand Electronics 209 ITR 63, which held that when the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not mandate disallowance of FTC due to a delay in filing Form 67. These rulings established that the filing of Form 67 is a directory requirement rather than a mandatory one, and procedural lapses should not result in the denial of a legitimate tax credit. Therefore, the appellant contended that the disallowance of FTC was erroneous and should be reversed. 18. On the contrary, the learned DR vehemently supported the findings of the authorities below. 19. We have heard the rival contentions of both the parties and perused the materials available on record. The brief facts of the case are that the assessee, a salaried individual employed with Evry India Pvt. Ltd., had initially filed a return of income on 29-08-2018, declaring income from salary at Rs. 3,85,964/-. Subsequently, the assessee filed a revised return on 28-03-2019, including salary income earned in Norway amounting to Rs. 16,33,528/-, and accordingly claimed Foreign Tax Credit of Rs. 2,34,743/- under Section 90 of the Act, pursuant to the provisions of the India-Norway DTAA. However, the CPC, in its intimation under Section 143(1), disallowed the claim on the ground that Form 67 was not filed before the due date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The relevant findings of the Coordinate Bench in the case cited above 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 December 2017 to March 2018 to tax in India. The Assessee claimed foreign tax credit ("FTC") for taxes paid in Australia. 3. There is no dispute that the Assessee is entitled to claim FTC. Rule 128 of the Income Tax Rules, 1962 (Rules) provides for giving FTC and reads thus: "Foreign Tax Credit. 128. (1) An assessee, being a resident shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn 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 67 is non-est in law. The CIT(A) also held that provisions of Rule 128 are mandatory in nature. The CIT(A)rejected the contention of the Assessee that filing of Form 67 is a procedural requirement and noncompliance thereof does not disentitle the Assessee of the FTC. 7. Aggrieved by the order of the CIT(A), the Assessee is in appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovide 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 submitted that that there are many sections in the Act which specifically deny deduction or exemption or relief in case the return is not filed within prescribed time. Reference was made to section 80AC, 80-IA(7), 10A(5) and 10B(5). Such language is not used in Rule 128(9). Therefore, such condition cannot be read into Rule 128(9). 11. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia 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 in compliance of a procedural provision. 14. The learned DR reiterated the stand of the revenue that rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to give FTC. He also submitted that the issue was debatable and cannot be subject matter of decision in Sec.154 proceedings which are restr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
