Tribunal grants relief, directs foreign tax credit allowance. Compliance emphasized.

The Tribunal allowed the appeal, stating that disallowance of foreign tax credits due to a delay in filing Form No.67 was not justified. The Tribunal directed the assessee to provide the necessary documents for verification and instructed the Assessing Officer to allow foreign tax credit in accordance with the rules and Section 90 of the Act. Compliance with procedural requirements was emphasized, and relief was granted to the assessee regarding the disallowance of foreign tax credits.

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Issues: Disallowance of foreign tax credits under Section 90 of the Act.

Detailed Analysis:
1. Issue of Disallowance of Foreign Tax Credits: The appeal by the assessee was against the disallowance of foreign tax credits amounting to Rs.6,42,677. The assessee, a resident individual deriving income from pension and annuity from the United States, claimed the foreign tax credits in the return of income for the assessment year in question. However, the Centralized Processing Centre disallowed the foreign tax credits claimed by the assessee under Section 90 of the Act.

2. Compliance with Provisions: The first appellate authority upheld the disallowance, citing non-compliance with Rule 128(9) of the Income-Tax Rules, which required the submission of Form No.67 before the due date specified for filing the return of income under Section 139(1) of the Act. Additionally, the authority highlighted the necessity of submitting a residency certificate of a country outside India as per Section 90(4) of the Act and other documents specified under Rule 128(8).

3. Assessee's Arguments: The counsel for the assessee argued that although Form No.67 was not submitted before the due date, it was furnished before the actual filing date of the return of income. Referring to a Tribunal decision and an amendment to Rule 128(9), the counsel contended that the rule should be considered directory rather than mandatory. The counsel also asserted that all required documents were submitted along with Form No.67 and the return of income, inviting verification by the assessing officer.

4. Tribunal's Decision: The Tribunal observed that the rule under Rule 128(9) could not be deemed mandatory, as it did not provide for disallowance of foreign tax credits due to a delay in filing Form No.67. Considering the legal position established by a prior case and the subsequent amendment to Rule 128(9), the Tribunal held that the disallowance based on the late filing of Form No.67 was not justified. However, concerning the alleged non-furnishing of other requisite documents as per Rule 128(8), the Tribunal directed the assessee to provide the documents to the Assessing Officer for verification and instructed the officer to allow foreign tax credit in accordance with the rules and Section 90 of the Act.

5. Conclusion: The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of complying with procedural requirements while granting relief to the assessee regarding the disallowance of foreign tax credits under Section 90 of the Act.

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