2024 (8) TMI 463

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....d is eligible for foreign tax credit in India, in the light of the provisions of section 90 of the Income Tax Act, 1961 and the Article 25 of India - USA and Article 23 of India-Netherland DTAA. 3. On the facts and in the circumstances of the case and in law the CPC, Bengaluru erred in not appreciating the fact that the disallowance of foreign tax credit for the taxes duly paid in USA and Netherland shall result into double taxation which is contrary to the provision of Income Tax Act, 1961 and the DTAA. 4. On the facts and in the circumstances of the case and in law the CPC, Bengaluru failed to appreciate the fact that filing of Form No. 67 under Rule 128 Of the Income Tax Rules, 1962 is a directory and not a mandatory requirement. 5. On the facts and in the circumstances of the case and in law the CPC, Bengaluru erred in not taking cognizance of the fact that the filing of Form No. 67 is a procedural requirement and the same cannot disentitle the substantive right of claiming foreign tax credit on taxes paid by the appellant in USA and Netherlands. 6. The appellant craves for leave to add, alter, amend, delete etc the above ground of appeal in ....

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....der updated return the time for filing Form 67 is extended to such date of furnishing of updated return and submitted that although the said notification has come into effect from 01.04.2022, being a notification giving relief to taxpayers, the same should also be applied to cases pertaining to period earlier to the said notification. 5. The contentions raised by the assessee did not convince the Ld. CIT(A) who denied relief to the assessee by observing, inter-alia as follows in paras 7.6 to 10.3 of his order :- "7.6. It is clear from above provisions that a resident taxpayer who has credit for any foreign tax paid in a country outside India by way of deduction or otherwise, will be required to furnish statement in Form 67 before due date specified under sub-section (1) of 139 to claim credit of such taxes. 7.7 In the instant case, the appellant had filed form 67 on 08/01/2022, however as per the intimation u/s 143(1) of the Act, the due date for filing of the ITR was 31/12/2021. Clearly the appellant had not followed provisions of rule 128 (9) of the Income Tax Rules. Hence, the AO had rightly denied the foreign tax credit. 7.8 The appellant had relie....

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....ilure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein." 9: Thus relying on the judgements on Hon'ble Supreme Court as stated above and as per provision of rule 128(9) of the Income Tax Rules, the ground no. 1 of the appeal is hereby dismissed. 10. Ground no. 2 relates to the claim of the appellant that the DTAA overrides the Income Tax Act as clause (2) of section 90 of the Income Tax Act 1961, expressly provide that provisions of agreements as referred in sub clause (1) of section 90 for granting relief of tax, the provisions of the Act shall apply to the extent they are beneficial ....

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..... The assessee filed Form 67 before the return for the relevant AY was processed u/s 143(1) of the Act by the Ld. AO. 10. Various coordinate benches of the Tribunal have held that filing Form 67 is a procedural/directory requirement and is not a mandatory requirement. 11. We find the Hyderabad Bench of Tribunal in the case of Baburao Atluri Vs. DCIT vide ITA Nos.108 & 118/Hyd/2022, order dated 22.07.2022 has allowed the FTC despite delay in filing the FTC certificate in form No.67 by observing as under: "10. We have heard the rival arguments made by both the sides, perused the orders of the AO and NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case did not allow the Foreign Tax Credit (FTC) on the ground that Form No.67 has been filed beyond the due date of filing of the return. We find the NFAC upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the ld. Counsel for the assessee that filing of foreign tax credit certificate in Form-67 is directory in nature and not mandatory and therefore....