2024 (4) TMI 1076 - AT - Income Tax

Tribunal Orders Review of Foreign Tax Credit Denial Due to Late Form 67 Filing; Directs Relief if Compliance Verified.

Diwakar Aggarwal Versus ITO, Ward-27 (1), New Delhi.

Diwakar Aggarwal Versus ITO, Ward-27 (1), New Delhi. - TMI Issues:The judgment involves the following Issues:1. Disallowance of Foreign Tax Credit u/s. 90 by the National Faceless Appeal Centre.2. Alleged errors in the findings by the National Faceless Appeal Centre.3. Adverse inferences on late filing of Form 67.4. Rejection of the Assessee's application u/s. 154 by the National Faceless Appeal Centre.Issue 1: Disallowance of Foreign Tax Credit u/s. 90:The appeal was filed by the assessee against the order of the Ld.CIT(A), National Faceless Appeal Centre, Delhi for the assessment year 2021-22. The primary grievance of the assessee was that the Assessing Officer did not allow the benefit of section 90 of the Income Tax Act, 1961, pertaining to tax credit paid in the source country. The Ld.CIT(A) observed that for claiming relief under section 90/91 of the Act, it is mandatory to furnish Form No. 67 before the due date specified for filing the return of income u/s. 139(1). As the appellant failed to file Form No. 67 within the specified time, the claim of Foreign Tax Credit was rightly disallowed by the AO. The Ld.CIT(A) upheld the AO's decision, stating that there was no mistake apparent from the record to amend the intimation u/s. 143(1) as the relief u/s. 90 was correctly denied due to non-filing of Form 67 within the prescribed timeline.Issue 2: Alleged Errors in Findings by the National Faceless Appeal Centre:The appellant contended that the Ld.CIT(A) erred in returning findings not subject to the intimation u/s. 143(1) or the order u/s. 154, which were not raised during the appeal. However, the Ld.CIT(A) clarified that the mandatory requirement for claiming relief u/s. 90/91 is to file Form 67 before the due date specified u/s. 139(1) of the Act. The Ld.CIT(A) emphasized that there is no provision to condone the delay in furnishing Form 67 as mandated by Rule 128(9) of the IT Rules, 1962. Consequently, the AO's disallowance of the claim of Foreign Tax Credit was deemed appropriate.Issue 3: Adverse Inferences on Late Filing of Form 67:The National Faceless Appeal Centre made adverse inferences regarding the late filing of Form 67 without inquiring into the reasons behind the delay. The Ld.CIT(A) highlighted that the failure to furnish Form No. 67 within the due date for filing the return of income u/s. 139(1) led to the disallowance of the claim of Foreign Tax Credit by the AO-CPC during the processing of the return of income u/s. 143(1).Issue 4: Rejection of Assessee's Application u/s. 154:The National Faceless Appeal Centre was criticized for holding that the Assessee's application u/s. 154 had been rejected, despite the claim being duly allowed but omitted in the computation. The Ld.CIT(A) maintained that the AO did not err in law or fact by rejecting the rectification application, as the claim of Foreign Tax Credit was correctly denied based on the non-compliance with Rule 128(9) of the IT Rules, 1962. However, upon review, the Tribunal directed the AO to verify whether Form No. 67 was filed by the assessee and grant relief accordingly. Ultimately, the appeal of the assessee was allowed for statistical purposes.