Tribunal Grants Foreign Tax Credit Claim, Dismissing Procedural Hurdles

The Tribunal ruled in favor of the assessee, allowing the claim of Foreign Tax Credit (FTC) that was initially disallowed by the CIT(A). The Tribunal held that the denial of FTC based on the non-filing of Form No.67 within the prescribed time limit was unjustified, emphasizing that such procedural requirements are not mandatory and do not negate the substantive right of claiming FTC. Therefore, the assessee's appeal was successful, and the benefit of FTC was granted as claimed under sections 90/91 of the Income-tax Act, 1961 for the assessment year 2020-2021.

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Issues involved:
The judgment involves the issue of disallowance of claim of Foreign Tax Credit (FTC) by the CIT(A) and the justification of the same.

Comprehensive Details:

Issue 1: Disallowance of Foreign Tax Credit (FTC) Claim
The assessee, an individual employed with Qualcomm India Private Limited, disclosed income from various sources for the assessment year 2020-2021, including salary earned abroad. The assessee claimed Foreign Tax Credit (FTC) of Rs.14,02,442 under sections 90/91 of the Income-tax Act, 1961. However, the FTC was not granted in the intimation under section 143(1) of the Act, leading to a rectification request by the assessee.

Issue 2: CIT(A)'s Decision and Tribunal's Analysis
The CIT(A) upheld the denial of FTC, citing the non-filing of Form No.67 within the prescribed time limit as per Rule 128 of the I.T.Rules. The assessee contended that the denial of credit for foreign tax paid overseas was incorrect, arguing that Rule 128 is directory, not mandatory. The Tribunal, referring to a Bangalore Bench order, agreed that the filing of Form 67 is procedural and not mandatory, emphasizing that violation of procedural norms does not negate the substantive right of claiming FTC.

Tribunal's Decision and Rationale
Based on the Bangalore Bench's precedent, the Tribunal ruled in favor of the assessee, holding that the assessee is entitled to the benefit of FTC. The Tribunal emphasized that the filing of Form No.67 is not a mandatory requirement, and the denial of FTC solely based on the belated filing of the form was unjustified. Therefore, the appeal filed by the assessee was allowed, granting the benefit of FTC claimed.

Conclusion
The Tribunal's decision overturned the CIT(A)'s confirmation of disallowance of FTC, emphasizing the procedural nature of filing Form No.67 and upholding the assessee's right to claim Foreign Tax Credit.

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