Tax Tribunal Remands Case on Foreign Tax Credit Due to Late Filing, Stresses Procedural Compliance for FTC Eligibility.

The ITAT remanded the case concerning the denial of Foreign Tax Credit (FTC) to the assessee, an Indian resident with foreign income from Kazakhstan. The issue arose due to late filing of the tax return, though Form No. 67 was timely submitted. The Tribunal instructed the AO to verify if the required Certificate or Statement was also submitted on time. If confirmed, the FTC should be granted, as all other conditions were satisfied. The Tribunal highlighted the retrospective application of Rule 128(9) and underscored the necessity of fulfilling all procedural requirements for FTC eligibility. The assessee was given an opportunity for a hearing.

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Issues:
Denial of Foreign Tax Credit (FTC) to the assessee.

Analysis:
The appeal was against the denial of Foreign Tax Credit (FTC) to the assessee. The assessee, a resident of India, earned a salary from a foreign employer in Kazakhstan and claimed credit for foreign tax paid. The issue arose when the benefit of TDS was denied as the return was filed after the due date. The relevant Rule 128 of the Income-tax Act, dealing with FTC, required the assessee to furnish Form No. 67 and a Certificate or Statement before the end of the assessment year. The assessee filed the return late but submitted Form No. 67 before the deadline. However, it was unclear if the Certificate or Statement was also provided in time. The Tribunal decided to set aside the order and directed the AO to verify if the Certificate or Statement was indeed submitted along with Form No. 67. If confirmed, the benefit of tax paid in Kazakhstan should be allowed, as all other conditions were met. The assessee was granted a hearing opportunity.

The Tribunal noted the retrospective effect of the amended Rule 128(9) requiring the filing of Form No. 67 and Certificate or Statement before the end of the assessment year. While the return was filed late, Form No. 67 was submitted on time. The crucial aspect was the submission of the Certificate or Statement, which needed verification. The Tribunal emphasized the importance of meeting all conditions for claiming FTC, including timely submission of required documents. The decision to remand the matter for further examination aimed at ensuring the correct application of rules and granting relief if the necessary conditions were fulfilled.

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