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TMI Blog2025 (5) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... ed States of America in respect of Income derived by the assessee which has been included in computing the Total Income and chargeable to tax in India in as much as in view of the Facts and circumstances of the case the credit in respect of the Foreign Tax Credit should have been granted to the Appellant assessee, and the Ld. CIT (Appeals) erred in law as well as in facts in conforming the said action of Ld. AO. 3. That the Ld. AO erred in law as well as in facts in taking the Total Income at Rs. 2,49,43,474/- (Round off to Rs. 2,49,43,470/-) in the Computation Sheet instead of Rs. 2,23,86,628/- (Round off to Rs. 2,23,86,630/-) as assessed in the assessment order passed u/s. 143(3) resulting in excess income of Rs. 25,56,846 and additional tax liability thereon, in as much as in view of the facts and circumstances of the case no such computation was at all called for and the Ld. CIT (Appeals) erred in law as well as in facts in not adjudicating the said ground of appeal as taken by the appellant in the First Appeal. 4. That the appellant craves leave to add, alter, change and/or modify any of the grounds of appeal at or before hearing of the appeal and claim further relief or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revised return on 30/03/2019 declaring total income of Rs. 2,23,86,630/-. The revised return was selected for scrutiny and the AO held that the credit of FTC amounting to Rs. 2,07,098/- cannot be allowed to the appellant, since, the appellant filed form 67 on 15/03/2019 which is beyond the due date u/s 139(1) of the Act and therefore, the appellant is not eligible for relief u/s 90 of the I.T. Act. 5.4 I have carefully considered the written submissions and facts of the case, it is an admitted fact that the appellant has violated the provisions of Rule 128(9) of the Income Tax Rule, 1962 wherein it is mandatory to file statutory ITR and Form No. 67 within due date. The issue under dispute is examined in the light of the provision of the statute. At the outset, as discussed above as per Rule 128 of the Income Tax Rules, 1962, a resident taxpayer is eligible to claim credit for any foreign tax paid, in a country or specified territory outside India. The credit shall be allowed only if the assessee furnishes the required particulars in Form 67 within the specified timelines i.e. on or before the due date specified for furnishing the return of income under sub-section (1) of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is shown at Rs. 2,23,86,630/-. The assessee had claimed the refund but on the contrary demand was raised. The Ld. CIT(A) did not consider the ground relating to the enhanced income. An application filed u/s 154 of the Act filed was rejected. After analysis of the computation sheet, it was noted that the income from capital gains shown at Rs. 68,28,041/- was not correct which as per the final revised return at pages 22 to 27 of the paper book was shown at Rs. 'NIL' on account of short term capital gains earned outside India and set off of brought forward losses for A.Y. 2016-17. It was submitted that the Ld. CIT(A) did not adjudicate this issue in the appeal. The Ld. DR vehemently supported the order of the Ld. CIT(A). 6. We have gone through the submissions made and also considered the facts of the case. Similar issue arose in the case of Jaspal Singh Bindra vs. DCIT in ITA No. 1826/KOL/2024 order dated 19.11.2024 in which the Coordinate Bench (in which the Accountant Member was a member) on similar issue of FTC allowed the appeal. The following cases have been referred in the said order as well as in the order of Rahul Anand (supra) relied upon by the assessee: i. CIT vs. G.M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of the DTAA read with Section 90 and same cannot be disallowed for non-compliance with procedural requirement as prescribed in the rules. 10. Further, we would like to mention that rule 128(9) provides that Form No. 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 No. 67 is not filed within the required time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. It is therefore evident that if the intention of the legislature were to deny the foreign tax credit, either the Act or the rules would have specifically provided that the foreign tax credit would be disallowed if the assessee does not file Form No. 67 within the due date prescribed under section 139(1) of the Act. We further note that as is judicially held, filing of Form No. 67 is a procedural/directory requirement and is not a mandatory requirement and violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC and such is the finding in the cases of the coordinate Benches referred to in the order of Jaspal Singh Bindra (supra). 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessed on 26.03.2021, however, the credit of FTC was not given effect to and the request made to the CPC to give effect to the FTC was not accepted and intimation along with notices of demand was received. The assessee also could not succeed with the rectification application filed and approached the CIT u/s 264 of the Act and at the same time filed a writ petition before the Hon'ble Madras High Court. It was stated by the respondent-department that rule 128 is mandatory and cannot be considered as directory in nature. The petitioner referred to the judgment of the Hon'ble Supreme Court in the case of CIT vs. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015. The Hon'ble High Court allowed the Writ Petition in favour of the assessee by holding as under:- "11. The law laid down by the Hon'ble Apex Court in Commissioner of Income Tax, Maharashtra v. G.M. Knitting Industries (P) Limited in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FTC, however the same was filed bef ..... 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