TaxTMI 
TaxTMI 
2023 (9) TMI 1401
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.... facts and in circumstances of the case and in law, the Id. Lower authorities has grossly erred in not considering the fact that the assessee appellant had received salary of Rs. 1,12,42,236/- in Spain and on which tax of Rs. 42,26,730/- was deducted and paid in Spain and tax relief of Rs. 37,41,228/- was claimed by the assessee and the benefit of section 90/90A is available to assessee appellant. 1.2. That in the facts and in circumstances of the case and in law, the Id. Lower authorities has grossly erred in not considering the fact that the assessee appellant had received salary of Rs. 8,25,000/- in India and on which tax liability of Rs. 40,15,776/- (3741228 + 274548) cannot arise in India. 1.3. That in the facts and in circumstances of the case and in law, the Id. Lower authorities has grossly erred in holding that the claim for foreign tax credit cannot be allowed if Form 67 is not filed before the due date specified for furnishing return, which is bad in law and against the order passed by various tribunals. 1.4. That in the facts and in circumstances of the case and in law, the Id. Lower authorities has grossly erred in appreciating the source & tax deducted/paid by t....
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....otal tax payable was worked out at Rs. 40,15,776/- and the assessee paid self-assessment tax of Rs. 2,47,620/- after claiming deduction of tax paid in Spain (37,41,228/-) & TDS deducted by Alisha (51,563/). However, the ld. Assessing Officer, CPC while processing the return under u/s 143(1) of the Act vide order dated 13.10.2022 has disallowed the credit of tax paid of Rs. 37,41,228/- in Spain and has raised demand of Rs. 43,52,848/ including interest. The Foreign Tax Credit (FTC) was not allowed as the assessee had not filed Form 67 before or along with the return as required under Rule 128. Aggrieved by the order of the AO, the assessee preferred appeal before ld. CIT (A). The ld. CIT (A) observing that the requirement of filing Form 67 before the due date of filing of return, for the purpose of seeking foreign tax credit, is a mandatory requirement laid down by Rule 128 of the IT Rules, 1962, confirmed the order of the AO. Now the assessee is in appeal before us. 3. The solitary ground raised by the assessee relates to challenging the order of ld. CIT (A) in confirming the disallowance of relief of foreign tax claim of Rs. 37,41,228/- under section 90/90A of the IT Act, 1961.....
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....d controversy, 6.1. The Hon'ble Jurisdictional Income Tax Appellate Tribunal, Jaipur Bench in the case of Ritesh Kumar Garg v. ITO (2022 (9) TMI 926 vide order dated 15.09.2022] while dealing with a similar issue has held that. It is important to mention here that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. In this regard Article 22 of India Finland DTAA provides for credit for foreign taxes. Since as per section 90 of the Act read with Article 22 sub clause (2) provides that Finland Income Tax paid shall be allowed as a credit against the Indian Tax but limited to proportion of Indian tax. In my view, neither section 90 nor DTAA provides that FTC shall be disallowed for non compliance with any procedural requirements. Since FTC is assessee's vested right as per Article 22(2) of the DTAA read with section 90 and thus same cannot be disallowed for non compliance of procedural requirement that is prescribed in the Rules. The procedural law is always subservient to and is in aid to justic....
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....ification has been made applicable from assessment year 2022- 23-it is very clear that even in a case belated filing of Form 67, the AO should consider tax paid by the assessee in other countries when income pertains to said tax credit has been offered to tax in India as per domestic tax laws. Therefore, we are of the considered view that, the AO is completely erred in denying credit for foreign tax for non-filing of Form 67 within the due date specified u/s. 139(1) of the Act. CIT(A), without appreciating facts simply sustained additions made by the AO and thus, we direct the AO to allow credit for foreign tax paid in other countries as per Form 67 filed by the assessee. Appeal filed by the assessee is allowed. 6.4. The Hon'ble Income Tax Appellate Tribunal, Delhi Bench in the case of Sumedha Arora v. ITO [2023 (3) TMI 719 vide order dated 15.03.2023] while dealing with a similar issue has held that: Co-ordinate Bench of Tribunal in the case of Ms. Brinda Ramakrishna [2022 (2) TMI 752- ITAT BANGALORE] clearly held that filing of Form 67 is a directory requirement and having regard to the position that DTAA overrides the provisions of the Act and Rule cannot be contrary to th....
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....) TMI 1430 ITAT BANGALORE]. The coordinate bench order of the Bangalore Tribunal had considered other coordinate benches orders and had held that (1) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No. 67; (ii) filing for Form No. 67 is not mandatory but a directory requirement and (iii) DTAA overrides the provision of the Act and the rules cannot be contrary to the Act. It was concluded by the Tribunal that non-furnishing of Form No. 67 before the due date under Section 139(1) of the Act is not fatal to the claim for FTC. We direct the AO to allow the claim of FTC. Appeal filed by the assessee is allowed. 6.7. The Hon'ble Income Tax Appellate Tribunal, Mumbai Bench in the case of Sonakshi Sinha v. CIT [2022 (10) TMI 107 vide order dated 20.09.2022] while dealing with a similar issue has held that: "We have carefully considered the rival contention and perused the orders of the lower authorities. Short question In this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing ....
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....year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further, the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed. 6.8 The Hon'ble Income Tax Appellate Tribunal, Kolkata Bench in the case of Atanu Mukherjee v. ITO [2022 (12) TMI 1082 vide order dated 20.12.2022) while dealing with a similar issue has held that: We have perused the Article 25 in the applicable DTAA between India and USA and also Rule ....
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....ion of Coordinate Bench of ITAT Visakhapatnam in ITA No. 269/Viz/2021 in the case of Muralikrishna Vaddi vs. ACIT/DCIT. 5. We have heard the ld. Counsels of both the parties. We have also perused the material placed on record and also judgments cited by the respective parties. Under this ground of appeal, the assessee has filed Form 67 for claiming relief under section 90 of the IT Act. The said form was filed by the assessee on 28.12.2022 and the Income Tax Return was filed as on 08.09.2021 claiming relief under section 90/90A of the IT Act of Rs. 37,41,228/-. It is an undisputed fact that the assessee has got salary from his employer in Spain and due tax has been deducted by the employer. As per Article 15 of Double Taxation Avoidance Agreement (DTAA) with country Spain, the tax payable by assessee in that country is eligible for relief under section 90 of the Income Tax Act, 1961 to the assessee. The said relief was denied by the revenue authorities on the ground that the return for the year under consideration was filed by the assessee on 08.09.2021. However, the form 67 was filed on 28.12.2022 and not along with the return of income filed on 08.09.2021. Since according to rev....
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..... In my view, section 295 sub section (1) of the Act provides powers to the CBDT to prescribe Rules for various purposes. Section 295 sub section (2) sub clause (ha) gives power to the Board to issue Rules for FTC. The relevant extract is as follows :- " (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters :- ..................... (ha) the procedure for granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act;" Thus, in this way the Board has power to prescribe procedure for granting FTC. Therefore, in my view the procedure prescribed in Rule 128 should be interpreted in this context. Therefore, Rule 128 is a procedural provision and not a mandatory provision. The said rule 128(9) provides that Form 67 should be filed on or before the due date of filing the return of income as prescribed under section 139(1) of the Act. However, the said Rule nowhere provides that if the said Form 67 is not filed within the above stat....