2025 (6) TMI 877

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....f appeal: Ground 1: Denial of FTC Based Solely on Late Submission of Form 67 Violates the DTAA's Intent 2.1 The CIT(A) erred in disallowing the appellant's FTC claim purely on procedural grounds. The India-US DTAA, read with Section 90 of the Income Tax Act, aims to provide substantive relief from double taxation. Its purpose is to encourage cross-border trade, investment, and economic cooperation by ensuring that taxpayers are not subjected to tax twice on the same income. This fundamental objective must not be thwarted by rigid adherence to procedural timelines. 2.2 By denying the FTC claim due to delayed Form 67 filing, the CIT(A) effectively subjects the appellant's legitimate foreign income to double taxation. This ou....

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....ith oversight rather than any intentional non-compliance or concealment. Substantial compliance - a well-established principle in Indian jurisprudence - dictates that minor procedural lapses should not deprive taxpayers of substantive rights. Here, the appellant has already disclosed foreign income and paid foreign taxes. The delay in filing Form 67, a mere procedural tool, in no way alters the fact that the underlying taxes were legitimately paid and documented. 2.6 The Hon'ble Supreme Court's decisions in Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner (1992) and Sambhaji & Others v. Gangabai & Others (2008) affirm that procedural laws are meant to serve as handmaidens to justice and not become stumbling blocks. Th....

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....was disallowed solely on the technical ground of late submission of Form 67 while passing intimation u/s 143(1) of the Act dated 13/10/2022. Despite the assessee's bonafide payment of foreign taxes and the explicit intent of the India-United States Double Taxation Avoidance Agreement (DTAA) to prevent double taxation, the ld. ADDL/JCIT(A) has, by strictly enforcing a procedural timeline, effectively imposed an additional tax burden contrary to the substantive rights and intentions of both the DTAA and section 90 of the Act. The ld. A.R. further submitted that the legislative and treaty framework governing FTC claims emphasizes substantive justice over procedural technicalities. The principle that treaties and substantive provisions of domes....

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....) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s.154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s.154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s.154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard." 4.1 Further, sim....