Tribunal Upholds Foreign Tax Credit Despite Late Form Submission, Finds Filing Requirement Directory, Not Mandatory.

The Tribunal dismissed the revenue's appeal concerning the denial of a foreign tax credit of Rs. 3,66,855/- due to the late submission of Form No. 67 by the assessee. Despite a 2-day delay in filing the appeal, which was condoned, the Tribunal found that the requirement to file Form 67 is directory, not mandatory. Citing precedents, the Tribunal upheld the assessee's eligibility for the foreign tax credit, ruling that the appeal should not be dismissed on the grounds of low tax effect. The decision was pronounced on 31st October 2023 in Kolkata.

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Issues involved:
The appeal by the revenue against the order of the National Faceless Appeal Centre for the Assessment Year 2020-21. Delay in filing the appeal by the revenue and the condonation of the delay. The main issue is the claim of foreign tax credit of Rs. 3,66,855/- denied due to belated submission of Form No. 67.

Delay in Filing Appeal and Condonation:
The Registry pointed out a 2-day delay in filing the appeal by the revenue. The revenue submitted a petition for condonation of delay, explaining the reasons. After perusing the petition, the Tribunal was convinced that there was sufficient cause for the delay, thus condoning it and admitting the appeal for hearing.

Grounds of Appeal:
The revenue raised grounds questioning the justification of allowing the appeal of the assessee for statistical purpose. The issue was regarding the claim of foreign tax credit of Rs. 3,66,855/- and the mandatory requirement of filing Form No. 67 before the income tax return.

Tax Effect and Merits of the Case:
The counsel for the assessee argued that due to low tax effect, as per CBDT Circular No. 17/2019, the appeal should be dismissed. However, the revenue contended that the issue raised falls under the exception mentioned in the circular as it pertains to the constitutional validity of Act or Rule. The Tribunal found merit in the revenue's contention and held that the appeal should not be dismissed based on low tax effect.

Foreign Tax Credit Issue:
The core issue revolved around the denial of foreign tax credit of Rs. 3,66,855/- to the assessee due to belated submission of Form No. 67. The assessee, a salaried employee sent on assignment to the USA, claimed this credit in the Indian income tax return. Despite the belated filing of Form 67, the Tribunal, based on precedents and decisions from other cases, held that the filing of Form 67 is directory in nature. The Tribunal cited previous cases to support the decision that even if Form 67 is filed belatedly, the assessee is eligible for the foreign tax credit. Consequently, the Tribunal dismissed the appeal of the revenue, upholding the allowance of the foreign tax credit.

Conclusion:
The Tribunal dismissed the appeal of the revenue, pronouncing the order on 31st October 2023 in Kolkata.

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