Appellate Tribunal allows Foreign Tax Credit despite Form 67 delay, emphasizing treaty prevails over domestic laws.

The Appellate Tribunal ruled in favor of the assessee, holding that the delay in filing Form 67 for the Foreign Tax Credit claim should not result in denial of the claim. The Tribunal considered the filing of Form 67 as a procedural requirement, not a mandatory one, emphasizing that the Double Taxation Avoidance Agreement prevails over domestic laws. The Tribunal directed the Assessing Officer to allow the Foreign Tax Credit to the assessee based on legal interpretation and precedents, contrary to the Commissioner's decision to deny the claim.

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Issues involved:
The appeal challenges the denial of Foreign Tax Credit (FTC) to the assessee for Assessment Year 2020-21 based on the delay in filing Form 67, as per the Income Tax Act, 1961 and the Income Tax Rules, 1962.

Issue 1: Foreign Tax Credit Claim
The assessee contended that the FTC claim of Rs. 161528 should have been allowed, despite filing Form 67 after the due date specified for the income tax return. The assessee relied on CBDT Notification No. 100/2022 which extended the time limit for filing Form 67 until the end of the assessment year. The assessee argued that the procedural requirement of filing Form 67 should not extinguish the substantial right to claim FTC, citing relevant legal precedents.

Issue 2: Denial of FTC Claim
The Commissioner of Income Tax (Appeals) denied the FTC claim, stating that the non-furnishing of Form 67 before the due date under section 139(1) of the Act is a stringent requirement for the claim. The Commissioner emphasized that procedural requirements should be followed, and the failure to file Form 67 on time rendered the appellant ineligible for FTC. The Commissioner upheld the Assessing Officer's decision to reject the claim under section 154 of the Act.

Decision:
The Appellate Tribunal disagreed with the Commissioner's view and ruled in favor of the assessee. The Tribunal considered filing Form 67 as a procedural/directory requirement, not a mandatory one. Referring to a similar case, the Tribunal highlighted that the delay in filing Form 67 should not lead to the disallowance of the FTC claim. The Tribunal held that the DTAA prevails over domestic laws, and the Rules cannot contradict the Act. Therefore, the Tribunal directed the Assessing Officer to allow the FTC to the assessee based on the legal interpretation and precedents cited in the case.

Separate Judgment:
The judgment was pronounced by Ms. Astha Chandra, Judicial Member, and Shri Shamim Yahya, Accountant Member, on 29th August 2023.

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