TaxTMI 
TaxTMI 
2025 (8) TMI 827
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....5,15,245/- only in the USA. While filing the return of income for the year under dispute, the assessee claimed the benefit of foreign tax payment of Rs. 5,15,245/- as per the provision of section 90 of the Act but the assessee failed to furnish form 67 before the due date of filing of return of income under section 139(1) of the Act, as required under rule 128(9) of the Income Tax Rule 1962. Hence, the CPC while processing the return under section 143(1) of the Act disallowed the claim of foreign tax credit in the absence of form 67 vide intimation dated 19-03-2021 and raised the demand of Rs. 6,63,110/- only. The assessee subsequently filed the form 67 on 18-01-2022 and furnished online request to the CPC to allow the claim of foreign tax credit. But CPC did not respond. 3. Being aggrieved, the assessee preferred an appeal before the learned CIT(A). 4. The assessee before the learned CIT(A) submitted that the filing of form 67 is a procedural requirement and not the mandatory requirement. In his case, the impugned form though not filed within the prescribed time limit under section 139(1) but upon realization of mistake, the same was duly filed. The assessee claimed that it ....
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....rdingly, the learned CIT(A) upheld the action of the Assessing Officer and dismissed the assessee's appeal. 6. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 7. The learned AR before us reiterated the submissions as made before the authorities below. 8. On the other hand, the learned DR before us could not controvert the arguments advanced by the learned AR for the assessee. However, the learned DR submitted that claim of the foreign tax credit has not been verified by the authorities below and therefore the authorities below should be directed to verify the same before allowing the benefit of the same to the assessee. 9. We have heard the rival contentions of both the parties and perused the materials available on record. The primary issue for adjudication in the present appeal is whether non-filing of Form 67 before the due date prescribed under section 139(1) should result in the denial of Foreign Tax Credit. At the outset, we note that the Rule 128 of the Income Tax Rules, 1962, which governs the claim of FTC, does not specify any consequence of non-filing or delayed filing of Form 67. In the absence of such penal consequenc....
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....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." One of the requirements of Rule 128 for claiming FTC is provided by Rule 128 (8) & (9) of the Rules and the same reads thus: "(8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee, namely:- (i) a statement of income from the country or specified territory outside India offered for tax for the previous year and of foreign tax deducted or paid on such income in Form No.67 and verified in the manner specified therein; (ii) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee,- (a) from the tax authority of the c....
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....before the Tribunal. The learned counsel for the Assessee submitted that disallowance of FTC is bad in law. He submitted that Section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. Article 24 of India Australia DTAA provides for credit for foreign taxes. Article 24(4)(a) is relevant in the present context. Same is extracted below: "4. In the case of India, double taxation shall be avoided as follows: (a) the amount of Australian tax paid under the laws of Australia and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of India in respect of income from sources within Australia which has been subjected to tax both in India and Australia shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax;" It was submitted by him that section 90 of the Act read with Article 24(4)(a) provides that Australian tax ....
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....into Rule 128(9). 11. It was further submitted that Filing of Form 67 is a procedural/directory requirement and is not a mandatory requirement. It was submitted that violation of procedural norm does not extinguish the substantive right of claiming the credit of FTC. Reliance was placed on the decision of the Hon'ble Supreme Court, in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, (1992 Supp (1) Supreme Court Cases 21) wherein it 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." Further reliance was placed on the decision of the Hon'ble Supreme Court, in the case of Sambhaji and Others v. Gangabai and Others, reported in (2008) 17 SCC 117, wherein it has been held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but....
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....t matter of decision in Sec.154 proceedings which are restricted in scope to mistakes apparent on the face of the record. 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. 15. In his rejoinder, the learned counsel for the Assessee submitted that Form No.67 was available before the AO when the intimation u/s. 143(1) of the Act dated 28.5.2020 was passed. He pointed out that the AO or the CIT(A) did not dismiss the Assessee application for rectification u/s. 154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No.67 before the due date u/s. 139(1) of the Act was fatal to the claim for FTC. 16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) Rule 128(9) of the Rules 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 an....