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of <h1>ITAT Hyderabad: Form 67 Timely Filing Key for Foreign Tax Credit</h1> <h3>Purushothama Reddy Vankireddy Tirupathi Versus ADIT (INTN Taxation) -1, Hyderabad</h3> Purushothama Reddy Vankireddy Tirupathi Versus ADIT (INTN Taxation) -1, Hyderabad - TMI Issues:1. Disallowance of Foreign Tax Credit (FTC) due to delay in filing Form 67. Analysis:The appeal before the Appellate Tribunal ITAT Hyderabad revolved around the denial of foreign tax credit to the assessee for the assessment year 2018-19. The primary issue was whether the assessee's failure to furnish Form 67 before the due date specified for filing the return of income under section 139(1) of the Income Tax Act, 1961, rendered him ineligible for the credit. The authorities contended that the assessee submitted Form 67 along with a revised return filed under section 139(5), which was deemed non-compliant. The crux of the matter was the interpretation of Rule 128(9) of the Income Tax Rules, 1963, which mandates the timely submission of Form 67 for claiming foreign tax credit. The assessee argued that the filing of Form 67 was a directory requirement, citing various Tribunal decisions supporting this stance.The learned Accountant Member and Judicial Member analyzed the conflicting views presented by the parties. The Learned AR representing the assessee emphasized that Rule 128(9) does not entail disallowance of FTC for delayed Form 67 filing, supported by precedents such as Babu Rao Atluri Vs. DCIT and M/s. 42 Hertz Software India (P) Ltd Vs. ACIT. Conversely, the Learned DR for the Revenue contended that the language of Rule 128(9) clearly mandates timely submission of Form 67, referencing the decision in Murali Krishna Vaddi Vs. ACIT. The Tribunal scrutinized these arguments in light of the case law and legal provisions to arrive at a reasoned decision.In its deliberation, the Tribunal examined the precedents cited by both sides, notably focusing on the interpretation of Rule 128(9) in conjunction with the India-USA Double Taxation Avoidance Agreement (DTAA). The Tribunal highlighted the significance of Article 25(2)(a) of the DTAA, which outlines the allowance of foreign tax credit to Indian residents. Relying on the DTAA provisions, the Tribunal concluded that Rule 128(9) must align with the DTAA to uphold the assessee's right to claim foreign tax credit. The Tribunal emphasized that rules should be interpreted in harmony with the Act and international agreements to uphold the rights and obligations of the parties involved.Ultimately, the Tribunal found merit in the assessee's arguments, aligning with the decisions cited in similar cases. Considering the DTAA's primacy over domestic rules, the Tribunal allowed the appeal, directing the Assessing Officer to verify and grant the foreign tax credit to the assessee in accordance with established legal principles. Consequently, the Tribunal dismissed the stay application as the appeal was allowed, affirming the assessee's entitlement to the foreign tax credit and setting a precedent for future cases involving similar issues.
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