Procedural delay in filing Form-67 cannot deny tax relief under sections 90/90A

ITAT Kolkata held that procedural delay in filing Form-67 cannot be the basis for denying tax relief under sections 90/90A. The CIT(A) erroneously rejected a binding precedent from ITAT Kolkata without providing reasons for differing from the superior court's judgment. The tribunal emphasized that inferior courts must assign proper reasons when departing from binding precedents. The assessee's appeal was allowed, establishing that tax relief cannot be denied solely due to delayed Form-67 filing.

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Issues:
Appeal against order u/s 250 of the Income Tax Act, 1961 for AY 2020-21; Denial of tax relief u/s 90/90A for delay in filing Form-67; Interpretation of Rule 128 of the Income Tax Rules, 1962 regarding mandatory nature of filing Form-67.

Analysis:
The appeal pertains to the denial of tax relief u/s 90/90A of the Income Tax Act, 1961 due to the delay in filing Form-67 by the assessee for AY 2020-21. The assessee, in his revised return of income, claimed a relief of Rs. 3,02,104/- u/s 90 of the Act. However, the claim was not granted by the CPC, Bengaluru, leading to the appeal before the ld. CIT(A) where the case was dismissed citing a delay in filing Form-67 as per Rule 128 of the Income Tax Rules, 1962. The assessee challenged this decision, arguing that filing Form-67 is a procedural formality and not mandatory, citing various judicial pronouncements in support. The ld. D/R supported the impugned order.

The ld. CIT(A) held that filing Form-67 is not only directive but mandatory in nature as per Rule 128 of the Income Tax Rules, 1962. However, the ITAT Kolkata in previous judgments has consistently held that denial of Foreign Tax Credit cannot be solely based on late filing of Form-67 as it is a procedural formality. The Coordinate Bench's decision in the case of Sobhan Lal Gangopadhyay vs. ADIT emphasized that the requirement to file Form-67 is directory, not mandatory, and non-compliance does not lead to disallowance of Foreign Tax Credit. The ITAT Kolkata, in the present case, found the ld. CIT(A)'s differing view without assigning reasons to be legally unjustifiable.

The ITAT Kolkata reiterated that the ld. AO should not have denied the relief u/s 90 of the Act solely due to a delay in filing Form-67, aligning with the precedents set by the Coordinate Bench. The judgment emphasized that the denial of relief based on procedural delays is not justified. Consequently, the appeal of the assessee was allowed, overturning the decision of the ld. CIT(A).

In conclusion, the ITAT Kolkata allowed the appeal filed by the assessee, emphasizing that the denial of tax relief u/s 90/90A solely due to a delay in filing Form-67 is not legally justifiable. The judgment reaffirmed the precedents set by the Coordinate Bench regarding the procedural nature of filing Form-67 and its non-mandatory status for claiming Foreign Tax Credit.

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