2024 (5) TMI 86 - AT - Income Tax

Foreign tax credit under section 90 allowed when Form 67 filed before assessment completion

Vipul Vasant Patil Versus The Asst. Director of Income-tax, Bengaluru

ITAT Mumbai allowed the appeal regarding foreign tax credit under section 90. The assessee claimed credit only in revised return and filed Form 67 after ... FTC u/s. 90 - credit for Foreign Taxes paid denied as Appellant has claimed the credit only in the revised return of income and not in the original return of income and also not filed Form No. 67 within the due date of filing of return of income prescribed u/s. 139(1) - HELD THAT:- Co-ordinate Bench of the Tribunal in the case of Vidya Tukaram Desai [2023 (12) TMI 1307 - ITAT MUMBAI] following the finding of coordinate bench in the case of Sonkashi Sinha (2022 (10) TMI 107 - ITAT MUMBAI] has allowed the claim of foreign tax credit where Form No. 67 is filed before the completion of the assessment for the relevant assessment year. Assessee is eligible for claim of the foreign tax credit as Form NO. 67 has been filed by the assessee along with revised return of income on 28.03.2019 which is much before the processing of the return of income by CPC on 11.06.2020. We direct the AO to consider the claim of the assessee subject to the verification of the facts as mentioned above. The matter is accordingly restored to the file of AO for considering the claim of the assessee of the foreign tax credit as directed above. Appeal of the assessee is allowed for statistical purposes Issues involved:1. Denial of relief u/s. 90 of the Income-tax Act, 1961 vis-à-vis credit for Foreign Taxes paid of Rs. 3,33,695.2. Levying of excessive interest u/s. 234B of the Income-tax Act, 1961.3. Levying of excess interest u/s. 234C of the Income-tax Act, 1961.Issue 1: Denial of relief u/s. 90 of the Income-tax Act, 1961 vis-à-vis credit for Foreign Taxes paid of Rs. 3,33,695:The appellant contested the denial of relief under section 90 for the credit of foreign taxes paid, claiming that the denial was incorrect as the necessary documents were submitted along with the revised return of income. The appellant argued that the denial was not in accordance with the law and requested the relief to be granted. The appellant cited relevant case law to support their claim, emphasizing that the filing of Form No. 67 before the completion of assessment should be considered sufficient compliance. The Tribunal noted precedents where foreign tax credit claims were allowed when Form No. 67 was filed before the completion of assessment, and directed the Assessing Officer to verify specific details related to the income earned in Singapore and the taxes paid there, before allowing the foreign tax credit claim.Issue 2: Levying of excessive interest u/s. 234B of the Income-tax Act, 1961:The appellant challenged the levy of excessive interest under section 234B, arguing that the action of the Assessing Officer was incorrect and not in accordance with the law. The appellant requested the deletion of the excess interest and the re-computation of tax liability accordingly. The Tribunal directed the Assessing Officer to compute the interest liability under section 234B in accordance with the law.Issue 3: Levying of excess interest u/s. 234C of the Income-tax Act, 1961:The appellant disputed the levy of excess interest under section 234C, contending that the amount levied was higher than what was due. The appellant argued that no further interest should be levied beyond what was already computed and paid. The Tribunal directed the Assessing Officer to delete the excess interest levied under section 234C and to re-compute the tax liability accordingly.Conclusion:The Tribunal allowed the appeal of the assessee for statistical purposes, directing the Assessing Officer to consider the foreign tax credit claim and compute the interest liability as per the law. The matter was remanded to the Assessing Officer for verification and necessary actions.