2025 (2) TMI 699 - AT - Income Tax

Filing Form 67 for Foreign Tax Credit is directory, not mandatory; late submissions still eligible for FTC.

Shri Shiraz Muhammed Basheer Versus The Income Tax Officer, Ward 1, Puducherry

Shri Shiraz Muhammed Basheer Versus The Income Tax Officer, Ward 1, Puducherry - TMI The appeal in this case revolves around the denial of Foreign Tax Credit (FTC) to the assessee in the intimation issued under section 143(1) of the Income Tax Act, 1961. The core legal question is whether the denial of FTC by the CIT(A) was justified. The relevant Assessment Year is 2019-20.The brief facts of the case are that the assessee, an individual employed by Shell India Markets Pvt. Ltd., was on an international assignment in the United Kingdom from 08.10.2018 to 09.10.2020. For the assessment year 2019-20, the assessee, being a Resident and Ordinarily Resident (ROR) under the Act, offered his salary income earned in the UK to tax in both India and the UK to avoid double taxation. The assessee claimed FTC of Rs.5,63,620 for the taxes paid in the UK, based on Section 90 of the Act, Article 24(2) of the India-UK Double Taxation Avoidance Agreement (DTAA), and CBDT Circular No.333 dated 02.04.1982. The claim was made in a revised return filed on 21.08.2020, supported by Form No. 67 filed on 04.08.2020. However, the intimation issued under section 143(1) of the Act denied the FTC claim as Form 67 was filed after the due date of filing the return.The assessee appealed to the First Appellate Authority (FAA), which upheld the denial of FTC, stating that it lacked the authority to condone the delay in filing Form 67. Subsequently, the assessee appealed to the Tribunal, citing a judgment by the Hon'ble Jurisdictional High Court in a similar case.The Tribunal considered the arguments of both parties and reviewed the facts. It noted that the assessee had initially not claimed FTC in the original return but filed Form 67 and a revised return to claim FTC later. The Tribunal referred to the judgment of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy, which held that filing Form 67 is directory, not mandatory. The Court ruled that as long as Form 67 is available at the time of processing the return under section 143(1) of the Act, the Central Processing Centre (CPC) must allow the FTC. The Tribunal also cited previous cases where the Chennai Benches of the Tribunal had allowed FTC in similar circumstances.Based on the above reasoning and judicial precedents, the Tribunal held that filing Form No. 67 within the due date of filing the return under section 139(1) of the Act is not a mandatory requirement but directory. Therefore, the Tribunal directed the Revenue to grant the FTC as per Form No. 67 and allowed the appeal filed by the assessee.In conclusion, the Tribunal's decision in this case establishes the principle that filing Form 67 for claiming FTC is directory, not mandatory. The final determination was in favor of the assessee, directing the Revenue to grant the FTC as per the form filed, thereby allowing the appeal.