TaxTMI 
TaxTMI 
2024 (4) TMI 1208
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....ircumstances of the case the said Foreign Tax Credit should have been allowed to the Appellant. 3. That the Ld. AO erred in law as well as in facts in not holding the requirement of filing of Form No. 67 as per rule 128 as procedural and directory and not mandatory, in as much as in view of the facts and circumstances of the case such requirement should have been considered as procedural and directory. 4. That the Ld. AO erred in law as well as in facts in not allowing the Foreign Tax Credit of Rs. 21,89,828/- in as much as in view of the provisions of Sec. 90(2), the same was to be allowed and the Ld. CIT(A) erred in confirming the action of Ld.AO. 5. That the Ld. AO erred in law as well as in facts in levying/charging excess interest of Rs. 1,09,489/- u/s. 234A and the Ld. CIT(A) erred in not adjudicating the said ground by holding that the ground is general and consequential in nature. 6. That the Ld. AO erred in law as well as in facts in levying/charging excess interest of Rs. 8,00,679/- u/s. 234B and the Ld. CIT(A) erred in not adjudicating the said ground by holding that the ground is general and consequential in nature. 7. That the Ld. AO erred in law as well as i....
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....g of the Form No. 67 was notified by notification No. 9 of 19th September 2017 and under these circumstances, since the utility to file Form No. 67 was not available till the due date of filing the return of income and rule 128 was introduced for the first time during the year under consideration, the said requirement was incapable of being performed for the said year by any assessee. The delay in submission of Form No. 67 was not condoned and the assessee could not succeed before the CIT(A) and the claim was rejected. Aggrieved, the assessee is now in appeal before the Tribunal. 5. The ld. Counsel of the assessee submitted that the authorities below have dismissed the claim of the assessee only on the ground that the assessee could not file Form No. 67 within the prescribed time and thus, the authorities below have erred in denying claim of deduction on account of foreign tax credit. According to the ld. Counsel for the assessee, the assessee was resident in India during the year and subrule (9) of rule 128 of the Act was introduced for the first time w.e.f. 01.04.2017 relevant for A.Y 2017-18 vide which the statement in Form No. 67 referred to in clause (1) of sub-rule (8) and t....
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....ubmitted that mere delay in filing Form No. 67 as per the provisions of rule 128(9) will not preclude the assessee for claiming the benefit of foreign tax credit in respect of tax paid outside India as per the DTAA. 6. On the other hand, ld. Departmental Representative supported the order of lower authorities. 7. Before proceeding further, we would like to reproduce rule 128 of the Income-tax Rules, 1962 (the Rules) which relates with foreign tax credit as under: "Foreign Tax Credit. 128. (1) An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India" 8. We further note that section 90 of the Act provides that Gove....
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....following decisions: i. CIT vs. G.M. Knitting Industries (P) Ltd. 71 Taxmann.com 35(SC) ii. Brinda Ramakrishna vs. ITO 193 ITD 840 (Bang.) iii. 42 Hertz Software India Pvt. Ltd. vs. Asst. CIT, Ita No. 29/Bang/2021 iv. Duraiswamy Kumaraswamy vs. PCIT, W.P No. 5834 of 2022 11. Hon'ble Supreme Court, in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, (1992 Supp (1) Supreme Court Cases 21) in resepct of compliance with the procedural requirements have observed that: "The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve." 12. Further, in the case of Engineering Analysis Centre of Excellence Private Limited vs the Commissioner of Income-tax & Anr. Civil Appeal Nos. 8733-8734 of 2018 & Ors., Hon'ble Supreme Court have held as under that the provisions of DTAA shall override the provisions of the Income-tax Act unless they....
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....that the assessee holds a foreign tax credit certificate for Rs. 1887114/-. In our considered opinion filing of form 67 is a procedural / directory requirement and is not a mandatory requirement. Therefore, violation of procedural norms does not extinguish the substantive right of claiming the credit of FTC. We accordingly direct the AO to allow the credit of FTC and hold that rule 128(9) of the Rules 3 does not provide for disallowance FTC in case of delay filing of form 67 is not mandatory but a directory requirement and DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. 9. In the result, the appeal filed by the assessee is allowed. 15. Similarly, in the case of Ashish Agrawal Vs. Income Tax Officer, Ward-12(1), Hyderabad ITA No. 337/Hyd/2023 ITAT HYDERABAD BENCHES "B", have held vide order dated 26/09/2023 that: 11. As far as the issue of FTC is concerned, learned AR placed reliance on the decision in the case of Ms. Brinda Rama Krishna (supra). In the case of Ms. Brinda Rama Krishna (supra), the Bench considered the issue in the light of the provisions of DTAA, section 295(1) of the Act, the decisions of the Hon'ble Apex Court in the ca....
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....rules for claiming FTC was inadvertently not uploaded along with the ITR which was uploaded on 02.02.2021. The return was processed on 26.03.2021, however, the credit of FTC was not given effect to and the request made to the CPC to give effect to the FTC was not accepted and intimation along with notices of demand was received. The assessee also could not succeed with the rectification application filed and approached the CIT u/s 264 of the Act and at the same time filed a writ petition before the Hon'ble Madras High Court. It was stated by the respondent department that rule 128 is mandatory and cannot be considered as directory in nature. The petitioner referred to the judgment of the Hon'ble Supreme Court in the case of CIT vs. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos.10782 of 2013 and 4048 of 2014 dated 24.06.2015. The Hon'ble High Court allowed the Writ Petition in favour of the assessee by holding as under: "11. The law laid down by the Hon'ble Apex Court in Commissioner of Income- Tax, Maharashtra v. G.M.Knitting Industries (P) Limited in Civil Appeal Nos.10782 of 2013 and 4048 of 2014 dated 24.06.2015, which was referred above, would be squarely applicable ....