TaxTMI 
TaxTMI 
2023 (9) TMI 1401
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....able to the assessee appellant. 1.1. 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. 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 aut....
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....ly, he has filed his return of Income on 08.09.2021 declaring total salary income of Rs. 1,20,67,236/- [11242236+825000] on which total 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 ord....
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....dingly should be eligible to claim the benefit of credit of foreign tax paid. 6. We also wish to rely upon the following authorities which have already decided the afore-said 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 se....
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....ed that Form 67 in prescribed form is required to be filed under Rule 128(9) of IT Rules, 1962 can be filed on or before extended due date for filing return of income u/s. 139(4) of the Act and said clarification 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 [....
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.... return under Section 139(1) of the Act. This issue is no longer res-integra and the same is covered in favour of the assessee by the coordinate bench order of the Tribunal in the case of Shashidhar Seetharam Sharma [2022 (9) 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. Sho....
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....n or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment 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, Kol....
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....k of the situation in totality, take a lenient and human approach towards the assessee appellant and admit the afore-said evidences." 4. On the contrary, the ld. D/R relied on the orders passed by the revenue authorities and also relied upon the decision 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 ....
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....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. 5.2. 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 i....
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.... of the Act. As the assessee has vested right to claim the FTC under the tax treaty and the same cannot be disallowed for mere delay in compliance of a procedural provision. 5.3. Even otherwise, the said Form 67 filed by the assessee before the tax authorities was available before the AO when the intimation under section 143(1) of the Act dated 25.11.2021 was passed. Therefore, in such circumstances, in my view, there were no reasons with the tax authorities for making disallowance when the said Form 67 was very much available with the AO at the time of framing the assessment order. While reaching to this conclusion, I further strengthen my view by relying upon the decision in the case of Brinda Rama Krishna vs. ITO 135 taxmann.com 358 wherein the Coordinate Bench of the Bangalore Tribunal had directed the Revenue to allow relief of FTC under section 90 of the Act, wherein Form 67 was filed after the prescribed due date. The ratio of the said decision in the case of Brinda Rama Krishna vs. ITO (supra) was further followed in another case decided by the Coordinate Bench of the Bangalore Tribunal in the case of 42 Hertz Software India Pvt. Ltd. vs. ACIT in IT Appeal No. 29 o....