2023 (5) TMI 271 - AT - Income Tax

Tribunal grants Foreign Tax Credit despite Form 67 non-compliance, emphasizing DTAA provisions over procedural requirements.

Sonia Sharma Versus ITO, Ward-5 (3) (4), Noida.

The Tribunal allowed the appeal, directing the Assessing Officer to grant the Foreign Tax Credit (FTC) relief to the assessee despite procedural ... Foreign Tax Credit (“FTC”) - claim of the assessee was declined purely on the basis that Form No.67 was required to be filed online before due date of filing of return of income - contention of the assessee is that it is well settled for requirement of furnishing Form No.67 is directory in nature and he should not be made to suffer when he is entitled for Foreign Tax Credit merely because Form No.67 could not be filed - HELD THAT:- As assessee that Form No.67 could not be uploaded alongwith revised return of income as the system did not open for accepting the same. We are unable to sustain this finding of Ld.CIT(A) as the Co-ordinate Bench of the Tribunal after examining the law and relying upon the judgement of Engineering Analysis Centre of Excellence (P.) Ltd.[2021 (3) TMI 138 - SUPREME COURT] has allowed FTC. Therefore, we hereby direct the AO to allow benefit of Foreign Trade Credit to the assessee in accordance with law, after condoning the delay in filing of Form No.67. Ground raised by the assessee are hence, allowed for statistical purposes. Issues Involved:1. Validity of the order under Section 250 of the Income Tax Act.2. Adequacy of the opportunity provided by the CIT(A).3. Entitlement to Foreign Tax Credit (FTC) relief under Sections 90/91 of the Income Tax Act.4. Impact of procedural non-compliance on FTC claims.5. Relevance of judicial precedents on the mandatory nature of Form 67 filing.Summary:1. Validity of the Order under Section 250:The assessee contested the order under Section 250 of the Income Tax Act, arguing it was 'bad-in-eyes of the law and fact.' The Tribunal noted that the CIT(A) dismissed the appeal due to the non-filing of Form 67, which is required for claiming FTC.2. Adequacy of the Opportunity Provided by the CIT(A):The assessee argued that the CIT(A) did not provide a 'reasonable and adequate opportunity of being heard.' The Tribunal found that the CIT(A) dismissed the appeal without giving the assessee a chance to present her case, which was against the principles of natural justice.3. Entitlement to Foreign Tax Credit (FTC) Relief:The assessee claimed FTC relief under Sections 90/91 of the Act. The CIT(A) dismissed this claim because Form 67 was not filed on time. The Tribunal noted that the assessee filed her return within the due date but failed to submit Form 67 due to a lack of knowledge and procedural issues.4. Impact of Procedural Non-Compliance on FTC Claims:The Tribunal discussed whether the requirement to file Form 67 is mandatory or directory. Citing precedents, it concluded that the requirement is directory, not mandatory, and procedural delays should not deny the assessee her rightful FTC. The Tribunal referenced the decision in Ms. Brinda RamaKrishna vs. ITO and 42 Hertz Software India Pvt. Ltd. vs. ACIT, which supported this view.5. Relevance of Judicial Precedents:The Tribunal referenced the Supreme Court's judgment in Engineering Analysis Centre of Excellence (P.) Ltd., which held that DTAA provisions override the Income Tax Act and Rules. It also cited the Supreme Court's decision in PCIT vs. M/s Wipro Limited, emphasizing that procedural compliance should not negate substantive rights under DTAA.Conclusion:The Tribunal directed the AO to allow the benefit of FTC to the assessee, condoning the delay in filing Form 67. The appeal was allowed for statistical purposes, and the order was pronounced on 27th April 2023.