Appellate Tribunal Grants Foreign Tax Credit to Assessee Despite Late Form-67 Submission Under Income Tax Act.

The Appellate Tribunal allowed the appeal filed by the assessee, reversing the decisions of the AO and the Commissioner of Income-tax (Appeals). The Tribunal ruled that the assessee was entitled to the foreign tax credit of Rs. 17,72,470 under section 90 of the Income Tax Act, 1961, despite the delayed filing of Form-67. The Tribunal emphasized that the technicality of the late filing should not prevent the assessee from receiving the legitimate foreign tax credit, especially given the tax deduction occurred in the UK.

---

---

Issues:
The only issue raised in this appeal is regarding the denial of foreign tax relief claimed by the assessee under sections 90/90A of the Income Tax Act, 1961.

Comprehensive Details:
The assessee, an employee of Cognizant Technology Solutions India Pvt. Ltd., was transferred to the UK in May 2008 and returned to India in September 2020. During the period in the UK, the assessee received equity shares under the Employee Stock Option Plan (ESOP) and restricted stock as benefits from the employer. The tax was deducted in the UK, amounting to Rs. 17,72,470, which the assessee claimed as foreign tax relief under sections 90/90A of the Act. However, the required Form-67 was not filed on time with the return of income. The Assessing Officer (AO) initially allowed the claim but later withdrew the foreign tax credit citing the delayed filing of Form-67, two and a half years after the return filing date.

The Commissioner of Income-tax (Appeals) upheld the AO's decision, stating that Form-67 was not filed as per Rule 128 of the Income Tax Rules, 1962, by the due date of the return of income under section 139(1) of the Act.

Upon review, the Appellate Tribunal found that the assessee was eligible for the foreign tax credit of Rs. 17,72,470 under section 90 of the Act. The Tribunal noted that while Rule 128 requires Form-67 to be filed by the due date, it does not specify denial of credit for delayed filing, especially when the tax was deducted in a foreign country like the UK. The Tribunal emphasized that the technicality of delayed filing should not deprive the assessee of the legitimate foreign tax credit. Citing precedents, the Tribunal ruled in favor of the assessee, allowing the appeal.

Therefore, the appeal filed by the assessee against the denial of foreign tax relief is allowed by the Appellate Tribunal, emphasizing the entitlement of the assessee to the foreign tax credit under section 90 of the Income Tax Act, 1961.

Kolkata, the 19th July, 2023.

---