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Tax Tribunal Supports Claim for Foreign Tax Credit, Overrules Denial Due to Non-Filing of Form 67 as Non-Mandatory Requirement. The ITAT ruled in favor of the assessee, directing the CPC, Bangalore, to allow the Foreign Tax Credit (FTC) claimed. The Tribunal determined that the ...
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Tax Tribunal Supports Claim for Foreign Tax Credit, Overrules Denial Due to Non-Filing of Form 67 as Non-Mandatory Requirement.
The ITAT ruled in favor of the assessee, directing the CPC, Bangalore, to allow the Foreign Tax Credit (FTC) claimed. The Tribunal determined that the denial of FTC based on the procedural non-filing of Form No. 67 was unwarranted, as the filing requirement was deemed directory, not mandatory. The appeal was allowed for statistical purposes, with the decision pronounced in March 2023.
Issues: Disallowance of Foreign Tax Credit (FTC) for non-filing of Form No. 67 along with the return of income.
Analysis: The appeal was made by the assessee against the order passed by the National Faceless Appeal Centre, Delhi for the assessment year 2020-21. The assessee did not appear, leading to the appeal being heard ex-parte. The main issue raised was the disallowance of Foreign Tax Credit (FTC) by the CIT(A), NFAC, Delhi. The assessee, an individual working in the USA, claimed FTC in India for taxes paid in the USA. The CIT(A) denied the FTC as the return of income was filed under section 139(4) instead of 139(1), which was deemed untimely. The CIT(A) upheld the denial of FTC by the CPC, Bangalore, for non-compliance with the filing requirements.
Upon review, it was found that the Form No. 67 was filed before the return of income, as evidenced in the order. The assessee attempted to rectify the situation through a 154 application but faced technical issues on the online portal. It was argued that the filing of Form No. 67 is procedural and not mandatory, and the right to claim FTC should not be forfeited due to procedural lapses. The statutory provisions under section 90 allow for claiming FTC, and Rule 128 of the Income Tax Rules, 1962 outlines the procedure for filing relevant documents. The rules were found to be directory in nature, and non-compliance should not disentitle the assessee from claiming FTC. The Tribunal directed the CPC, Bangalore, to allow the Foreign Tax Credit claimed by the assessee, as the denial based on procedural grounds was deemed unwarranted.
In conclusion, the appeal by the assessee was allowed for statistical purposes, and the order was pronounced in March 2023.
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