2023 (4) TMI 62 - AT - Income Tax

Tribunal grants appeal for delay, directs reassessment of foreign tax credit claim.

Preetha Reddy Versus The Assistant Commissioner of Income Tax Central Circle 3 (1), Chennai.

Preetha Reddy Versus The Assistant Commissioner of Income Tax Central Circle 3 (1), Chennai. - TMI Issues Involved:1. Condonation of delay in filing the appeal.2. Merits of the case regarding the assessment order and foreign tax credit claim.Summary:1. Condonation of Delay:The appeal filed by the assessee was delayed by 284 days. The assessee requested condonation of delay, attributing it to the advice of their Chartered Accountant (CA), Mrs. K. Rajalakshmi, who misunderstood the order of the Principal Commissioner of Income Tax (PCIT) as merely setting aside the assessment for verification without requiring an appeal. Both the assessee and the CA filed affidavits supporting this claim. The Tribunal, referencing the case of Vijay Vishin Meghani v. DCIT [2017] 398 ITR 250 (Bom) and other relevant judgments, condoned the delay, finding sufficient cause and admitting the appeal for adjudication.2. Merits of the Case:The original assessment was completed under section 143(3) of the Income Tax Act, 1961, allowing the assessee's claim for foreign tax credit of Rs. 1,20,93,788 under section 90. The PCIT, upon review, found that Form No. 67 required for claiming the credit was not filed by the due date as per Rule 128(8) and issued a show-cause notice. The PCIT concluded that the assessment order was erroneous and prejudicial to the interests of Revenue, directing the Assessing Officer (AO) to deny the relief due to non-compliance with the filing requirement.The Tribunal noted that the AO had made detailed inquiries during the assessment but had not specifically examined the compliance with Form No. 67 and Rule 128(8). The Tribunal found that while the AO's order was not entirely erroneous, it lacked specific inquiry into the Form No. 67 compliance. Therefore, the Tribunal modified the PCIT's order, directing the AO to redo the assessment in accordance with the law, providing the assessee a reasonable opportunity to be heard, without being influenced by the PCIT's directive to deny the relief outright.Conclusion:The appeal was partly allowed for statistical purposes, with the Tribunal directing a reassessment by the AO to properly examine the foreign tax credit claim in compliance with relevant rules and notifications. The order was pronounced on 31st March 2023 at Chennai.