TaxTMI 
TaxTMI 
2024 (12) TMI 854
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....ng fact that the income of Rs. 15,37,477 is doubly taxed and the appellant being resident of India, taxes suffered in Sri Lanka on such doubly taxed income ought to be allowed as credit in terms of Article 23(2) of India- Sri Lanka tax treaty. 2.3 The learned CIT(A) ought to have appreciated as per Section 90 of the Income Tax Act, 1961 read with Article 23 of India- Sri Lanka Tax treaty the appellant is entitled to Foreign Tax Relief of Rs. 3,64,686. Tax Treaty overrides the provisions of the Act and rules cannot be contrary to the Act. 2.4 The learned CIT(A) has erred in not considering the Form 67 and other document submitted along with Form 67 on 31 March 2021 i.e., on or before filing of revised return of income. 2.5 The learned CIT(A) and the CPC have erred in not granting credit to the Appellant on foreign tax paid in spite of the fact that Form 67 was duly filed online By the Appellant and were available at the time of passing of the Orders, thereby causing miscarriage of substantial justice to the Appellant. 2.6 Without prejudice, the learned CIT(A) ought to have appreciated that Rule 128(9) of Income tax Rules, 1962 does not provide for....
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.... procedural and non-compliance of such procedural requirement not result into denial of foreign tax credit. 2.1 On the facts of the case, the issue which required adjudication is whether assessee is to claim foreign tax credit, where form no.67, as required rule 128 of the I.T. Rules, 1962 was not filed within the due date of filing of the return income for the relevant assessment year. As per Rule 128 of the Income-tax Act, 1962, credit of foreign tax paid by assessee in the country or specified territory outside India is allowed in the year which the income corresponding to such tax has been offered to tax or assessed tax in India. Further, as per sub-rule 8 of Rule 128, statement of income from country and tax paid in foreign country on such income, shall be furnished in No. 67 for availing foreign tax credit. Further sub-rule 9 of Rule 128 states that statement in Form No. 67 shall furnished on or before the due date for filing of return of income u/s 139(1) of the Sub-rule 1 of Rule 128 states that a resident assessee shall be allowed a credit foreign tax paid by him in a country or specified territory outside India, in the year which the income corresponding to such tax ha....
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....does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC. The findings of this Tribunal are reproduced below: "2. The Assessee is an individual and during the previous year relevant to AY 2018-19 an ordinary resident in India. The Assessee worked with Ernst & Young Australia from 20.11.2017 till 16.05.2019. Since her global income was taxable in India, the Assessee offered to tax salary income earned for services rendered in Australia for the period from December 2017 to March 2018 to tax in India. The Assessee claimed foreign tax credit ("FTC") for taxes paid in Australia. 3. There is no dispute that the Assessee is entitled to claim FTC. Rule 128 of the Income Tax Rules, 1962 (Rules) provides for giving FTC and reads thus: "Foreign Tax Credit. 128. (1) An assessee, being a resident shall be allowed a credit for the amount of any foreign tax pai....
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....f claim of foreign tax credit on 18.04.2020. The revised return of income was processed by Centralized Processing Centre (CPC) electronically and intimation u/s 143(1) of the Act on 28.05.2020 was passed disallowing the claim of FTC. 5. The Assessee filed a rectification application before the AO on 15.06.2020 & 25.02.2021 and submitted that credit for FTC as claimed in the return should be given. In the rectification order dated 10.03.2021, the AO upheld the action on the ground that the Assessee has failed to furnish Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) of the Act which is mandatory according to Rule 128(9) of the Rules. 6. On appeal by the Assessee, the CIT(A) vide Order dated 03.09.2021 confirmed the Order of AO. The CIT(A) held that the Assessee has not filed Form 67 before the time allowed under section 139(5) of the Act, and therefore Form 67 is nonest in law. The CIT(A) also held that provisions of Rule 128 are mandatory in nature. The CIT(A)rejected the contention of the Assessee that filing of Form 67 is a procedural requirement and noncompliance thereof does not disentitle the Assessee of the FTC.....
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.... 9. It was submitted that the Board has power to prescribe procedure to granting FTC. However, the Board does not have power to prescribe a condition or provide for disallowance of FTC. The procedure prescribed in Rule 128 should therefore be interpreted in this context. Rule 128 is therefore a procedural provision and not a mandatory provision. 10. It was further submitted that Rule 128(9) provides that Form 67 should be filed on or before the due date of filing the return of income as prescribed u/s 139(1) of the Act. However, the Rule nowhere provides that if the said Form 67 is not filed within the above stated time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. The learned counsel for the Assessee submitted that in case the intention was to deny the FTC, either the Act or the Rules would have specifically provided that the FTC would be disallowed if the assessee does not file Form 67 within the due date prescribed under section 139(1) of the Act. It was submitted that that there are many sections in the Act which specifically deny deduction or exemption or relief in case the return is not filed within prescribed time. Reference....
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.... * CIT-II vs Mantec Consultants (P.) Ltd [2009] 178 Taxman 429 (Delhi) * CIT vs ACE Multitaxes Systems (P.) Ltd [2009] 317 ITR 207 (Karnataka). 13. It was submitted that as per the provisions of section 90(2) of the Act, where the Central Government of India has entered into a DTAA, the provisions of the Act would apply to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. Reliance in this regard is placed on the following cases and circulars: Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) CIT v Eli Lily & Co (India) P Ltd (2009) 178 Taxman 505 (SC) GE India Technology Centre P Ltd v CIT (2010) 193 Taxman 234 (SC) Engineering Analysis Centre of Excellence P Ltd v CIT (2021) 125 taxmann.com 42 (SC) (Pg 106-109 of PB 2-Para 25 & 26) CBDT Circular No 333 dated 2/4/82 137 ITR (St.) It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance of any procedural provision. As the provisions of DTAA override the p....