2023 (10) TMI 399 - AT - Income Tax

Foreign Tax Credit granted despite late Form 67 filing; Tribunal rules filing deadline is directory, not mandatory.

The Tribunal allowed the appeal, directing the Assessing Officer to grant the Foreign Tax Credit to the assessee despite the delay in filing Form 67. It ... Denial of the credit of Foreign Tax Credit for the delay in filing of Form 67 - taxes paid in USA - HELD THAT:- As decided in BHASKAR DUTTA VERSUS DCIT, INT. TAX-1 (2) (2) , NEW DELHI. [2023 (1) TMI 534 - ITAT DELHI] held that Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Assessee appeal allowed. Issues involved:The denial of credit of Foreign Tax Credit for the delay in filing of Form 67.Summary:The appeal was filed against the order of the CIT(A) confirming the denial of the credit of Foreign Tax Credit due to the delay in filing Form 67. The assessee filed a revised return claiming relief for Foreign Tax Credit, which was disallowed. The only reason for denying the credit was the delay in filing Form 67.The Tribunal considered previous cases where it was held that the filing of Form 67 within the extended period of limitation as per the order of the Supreme Court allowed for the Foreign Tax Credit. It was also noted that the requirement of filing Form 67 before the due date of filing the return of income is directory in nature and not mandatory. The Tribunal directed the Assessing Officer to allow the Foreign Tax Credit to the assessee based on these interpretations.No distinguishing decision was brought to the attention of the Tribunal, and therefore, following the precedent set by the Co-ordinate Bench, the appeal of the assessee was allowed.