TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 638
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....eign tax credit and board does not have power to prescribe for disallowance of foreign tax credit. (2) For that CIT (A) erred in trite law that DTAA overrides the provisions of the Act and the Rules, as held by various Hon'ble High Courts, which has also been confirmed by Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT [2021] 125 taxmann.com 42/281 Taxman 19/432 ITR 471. 3) For that CIT(A) has ignored to follow judicial hierarchy as the recent jurisdictional ITAT Bench-B Kolkata order in case of Sukdev Sen Vs ACIT, Circle-61, Kolkata (1.T.A. No.78/Kol/2024) on 18.04.2024 was submitted during appeal proceedings and this order states that merely because the assessee could not file Form No. 67 within the prescribed time limit as per the provisions of rule 128(9) of the Income-tax rules, 1962, as it stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of taxes paid outside India. (4) For that Assistant Director of Income Tax, CPC, (in short "AO") and CIT (A) erred in not following the provisions specified in under section 90 of Income Tax Act 1961 fo....
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....d an appeal before the Ld. CIT(A) and cited several case laws in support of claim of FTC. However, the Ld. CIT(A) dismissed the appeal by giving the following findings: - "Discussions and Findings:- I have carefully examined the material at hand including the impugned orders, the submissions of the appellant, the citations and orders relied upon by him as well as the citations that are more broadly applicable to the facts of this case. The brief facts of the case are that the assessee is a resident individual and had filed his return of income on 31.08.2019 for the A.Y. 2019-20. The assessee was working in India till January 2019 and he left India in the month of February 2019 for an assignment in Thailand. During the assessment year under consideration, the assessee had earned gross salary of Rs. 28,19,740/- in India and salary of Rs. 5.29.210/- for rendering services outside of India from Deloitte Touche Tohmatsu Jaiyos Advisory CO Ltd. Thailand. In the Intimation u/s 143(1) and in the rectification order u/s 154, the claim of the tax relief of Rs. 73.658/- u/s 90/90A of the IT Act. Therefore, the appeal is being disposed ground wise as below. Ground No 1,2 & 3 On perusal....
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.... the Paper Book containing the Doble Taxation Avoidance Agreement between India and Thailand dt. 27.06.1986. The form no.67 was filed on 08.04.2021, which was subsequent to the intimation u/s 143(1) of the Act on 23.03.2021. 5. Further, similar issue arose in the case of Sukhdev Sen Vs. ACIT, Circle -1, Kolkata (ITA No. 78/Kol/2014, dated 26.03.2024). The relevant extract of the aforesaid order is as under: "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 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 lax 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 ....
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.... FTC. In support of the claim, the assessee has relied upon several decisions including the following decision: i. CIT vs. G.M. Knitting Industries (P) Ltd. 71 Tuxmann.com 35(SC) ii. Brinda Ramakrishna us. IPO 193 ITD 840 (Bang) iii. 42 Hertz Software India Pvt. Ltd vs Asst. CIT. Ita No. 29. Hang/2001 iv. Duraiswamy Kumaraswamy vs. PCIT, W.P No.5834 of 2022 Hon'ble Supreme Court, in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, [1992 Supp (1) Supreme Court Cases 21) in respect of compliance with the procedural requirements have observed that: "The mere fact that it is statutory does not matter one way of that 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." 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 t....
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....tion to the orders of the authorities below. The undisputed fact is 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 het 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. 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: 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,....
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.... assessment year 2019-20, the Form No. 67 prescribed in rule 128 of the rules for claiming FTC was inadvertently not uploaded along with the ITK 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 40....
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.... in respect of tax paid outside India by the assessee in accordance with law and the DTAA between India and the USA. Accordingly, grounds no. 2,3,4 of the appeal are allowed." 6. The relevant extract of Article 23 of India Thailand Double Taxation Avoidance Agreement (DTAA) is as under: "ARTICLE 23 ELIMINATION OF DOUBLE TAXATION 1. The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Agreement. 2. Double taxation shall be eliminated as follows: (i) In India, (a) Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Thailand, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Thailand. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Thailand. (b) Where in accordance with any provision of the Agreement income derived by a resid....