TaxTMI 
TaxTMI 
2025 (6) TMI 1398
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....in filing Form-67, as held by various courts. 2. The learned Addl. / Jt. CIT(A), Aurangabad erred in law and on facts in not appreciating that filing of Form-67 as per Rule 128 of the ITR, 1962 is only directory in nature and therefore non grant of foreign tax credit for delay in filing Form-67 is uncalled for, as held by various courts. 3. The learned Addl. / Jt. CIT(A), Aurangabad erred in law and on facts in not appreciating that non grant of foreign tax credit, due to delay in filing Form-67, is against the provisions of section 90 of the ITA, 1961 and the DTAA between India and USA. 4. The learned Addl. / Jt. CIT(A), Aurangabad erred in law and on facts, in not following the binding decisions of the Honorable Madras High Court and the Jurisdictional Honorable ITAT, Kolkata Bench. 5. Appellant craves leave to add / alter / modify / amend / delete all / any of the Grounds of Appeal." 3. Brief facts of the case are that the assessee is an individual and was employed with M/s. Microsoft India (R&D) Pvt. Ltd. during AY 2020-21. He was working in India and USA during AY 2020-21 and had received salary in India and USA. Since the assessee was a ....
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....dit 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 " As per the provisions of Rule 128(1) of the ITR, 1962 credit of taxes paid outside India to be granted in the year in which the corresponding income is offered to tax in India. b) Provision of section 90: The relevant provision of section 90(1) of the ITA, 1961 as applicable for AY 2020-21 is reproduced below for sake of easy referencing: "Section 90 (1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,- (a) for the granting of relief in respect of- (i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be or (ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or As per the provisions of section 90(1) of the ITA, 1961 credit of taxes paid outside India ....
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....of Rule 128(9) of the ITR, 1962 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 ITA, 1961. However, the rule nowhere provides that if the said Form-67 is not filed within the required time frame, the relief as sought u/s 90 of the ITA, 1961 would be denied. It is therefore evident that if the intention of the legislature were to deny the Foreign Tax Credit, either the Income Tax Act or the Income Tax Rules would have specifically provided that the Foreign Tax Credit would be disallowed if Form-67 is not filed within the due date prescribed under section 139(1) of the ITA, 1961. As such, it can be safely concluded that filing of Form-67 is merely a procedural / directory requirement and is not a mandatory requirement and violation of procedural norm does not extinguish the substantive right of claiming the credit of Foreign Tax. Further, Rule 128(9) of the ITR, 1962 has been amended w.r.e.f. 01/04/2022 and provides that Form-67 can be filed within the due date prescribed u/s 139(1) / 139(4) of the ITA, 1961. Though, the said amended rule is applicable from 01/04/2022, since the said rule is beneficially, it ca....
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.... viii) Jaspal Singh Bindra Vs. DCIT-1826/KOL/2024 (Kolkata ITAT) ix) Neetu Agarwal Vs. ITO-1898/KOL/2024 (Kolkata ITAT) x) Ratanlal Bhura Vs. DCIT-1719/KOL/2024 (Kolkata ITAT)" 6. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 7. We have considered the submission made. The facts are similar to that in the case of Swapan Bhttacharya vs. ACIT, Circle-61, Kolkata in ITA No. 242/KOL/2025 order dated 05.05.2025 (in which the Accountant Member was part of the Bench) in which the Coordinate Bench has held as under: "5. Rival submissions were heard and the record and the submissions made have been examined. During the course of the appeal, the Ld. DR submitted that the Form No. 67 was filed on 30.03.2019, which was late and was filed beyond the due date of filing the return of income. The Ld. AR submitted that during the year the income was earned in USA and section 90 of the Act read with the DTAA was applicable. Though Form No. 67 was filed late but the same was filed on 30.03.2019 and was available at the time of processing of the return of income carried out u/s 143(1) of the Act on 25.12.2019 as well a....
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....da Ramakrishna us. ITO 193 ITD 840 (Bang) iii. 42 Hertz Software India Pvt. Ltd vs Asst. CIT. ITA No. 29/ Bang/2001 iv. Duraiswamy Kumaraswamy vs. PCIT, W.P. No.5834 of 2022 7. Before proceeding further, we would like to reproduce rule 128 of the Income-tax Rules, 1962 (the Rules) which relates to foreign tax credit and is 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 tax or assessed to tax in India." 8. We further note that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting reli....
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....pra). 11. 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." 12. Further, in the case of Engineering Analysis Centre of Excellence (P.) Ltd. vs. Commissioner of Income-tax [2021] 125 taxmann.com 42 (SC)/[2021] 281 Taxman 19 (SC)/[2021] 432 ITR 471 (SC), Hon'ble Supreme Court have held as under that the provisions of DTAA shall override the provisions of the Income-tax Act unless they are more beneficial to the assessee: 165. The conclusions in the aforestated paragraph have no direct relevance to the facts at hand as the effect of section 90(2) of the Income-tax Act, read with explanation 4....
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....e returns were filed without FTC, however the same was filed before passing of the final assessment order. The filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. This is what the Hon'ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order. W P. No 5834 of 2022. 12. Further, in the present case, the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside. 13. Accordingly, the impugned order dated 25.01.2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The resp....