2024 (2) TMI 837 - AT - Income Tax

Late filing of Form 67 cannot deny foreign tax credit under Section 90 Rule 128(9)

Power and Energy Consultants India Pvt. Ltd. Versus ITO, Ward-19 (1), Delhi

Power and Energy Consultants India Pvt. Ltd. Versus ITO, Ward-19 (1), Delhi - TMI Issues Involved:1. Dismissal of appeal by NFAC without considering the appellant's submission.2. Denial of Foreign Tax Credit (FTC) due to the late filing of Form 67.Summary:Issue 1: Dismissal of Appeal by NFACThe National Faceless Appeal Centre (NFAC) dismissed the appeal without considering the appellant's submission and sustained the addition based on conjecture and surmises without deciding the matter on merits of the case. The appellant argued that the filing of Form 67 before filing the return of income is directory in nature, not mandatory, and hence the dismissal of the appellate order is in law and liable to be deleted.Issue 2: Denial of Foreign Tax Credit (FTC)The assessee electronically filed its return of income on 15.01.2022, claiming a foreign tax credit of Rs. 30,10,546/-. The return was processed on 25.10.2022, but the FTC was denied as Form 67 was not filed. The assessee subsequently filed Form 67 and a rectification petition, which was dismissed on the grounds that Form 67 was not filed before the end of the relevant assessment year. The CIT(A) upheld this decision, stating that the assessee is bound to file Form 67 before the end of the relevant assessment year to claim relief under Section 90 of the Act.The Tribunal referenced Rule 128 of the Income Tax Rules, which outlines the requirements for claiming FTC. It noted that the issue is no longer res integra, citing a decision by the Bangalore Bench in the case of Brinda Ramakrishna Vs. ITO, where it was held that filing Form 67 is a procedural requirement and not mandatory. The Tribunal emphasized that neither Section 90 of the Act nor the DTAA provides that FTC shall be disallowed for non-compliance with procedural requirements, and FTC is a vested right of the assessee.The Tribunal also referenced decisions from various High Courts and the Supreme Court, which held that procedural requirements should not override substantive rights. It concluded that the intention of the legislature is not to deny FTC merely because Form 67 was filed belatedly, making the filing of Form 67 a procedural requirement and not mandatory.In conclusion, the Tribunal directed the Assessing Officer to grant FTC to the assessee, allowing the appeal.Order pronounced in the open court on 15/02/2024.