2025 (11) TMI 30

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..... AO) of not allowing Foreign Tax Credit ('FTC') of Rs. 3,36,850 allowable as per Section90 of the Act read with Article 25 of the India-USA Double Taxation Avoidance Agreement ('DTAA') read with CBDT circular 333 dated 02 April 1982, in the Intimation under Section 143(1) of the Income Tax Act 1961 ("the Act"). It is prayed that the Ld. Jurisdictional Assessing Officer ('JAO') be directed to allow FTC of Rs. 3,36,850 as the order of the Ld. ADDL/JCIT(A) is contrary to the Order of Mumbai Bench of the Hon'ble Income Tax Appellate Tribunal (ITAT) in the case of Anuj Bhagwati vs. Deputy Commissioner of Income Tax-Circle - 1(1)(1), Mumbai (ITA No.1844 & 1845/MUM/2022) as well as several Judicial Precedents including the following relied upon before the Ld. ADDL/JCIT(A): • Ms. Sonakshi Sinha vs. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (ITA No.1704/Mum/2022) • Ms. Brinda Rama Krishna vs. The Income Tax Officer, Ward 5(3)(1), Bangalore (ITA No.454/Bang/2021) • Mr. Vinodkumar Lakshmipathi vs. CIT(A), NFAC [ITA No.680/Bang/2022] • Income-tax officer, Ward 1(1), Asansol v. Sandip Choubey....

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.... Ld. ADDL/JCIT(A) relating to TDS credit." 3. The relevant facts in brief are that the Assessee, resident individual had filed return of income for the Assessment Year 2023-2024, claiming foreign tax credit of INR. 3,36,850/- under Section 90 of the Act read with Article 25 of the Double Taxation Avoidance Agreement between India and USA. While processing return of income the aforesaid foreign tax credit was denied to the Assessee since the Form No.67 was not filed by the Assessee within the due date of filing return of income under Section 139(1) of the Act. The Assessee challenged the intimation, dated 29/08/2024, issued under Section 143(1) of the Act denying the aforesaid foreign tax credit in appeal before the CIT(A). Before the CIT(A), it was contended on behalf of the Assessee that the Assessee was resident in India for the relevant previous year, and had offered to tax foreign sourced income of INR. 21,37,514/- in India as well as in USA. In order to avoid double taxation of such foreign sourced income, the Assessee claimed foreign tax credit of INR. 3,36,850/- in accordance with Section 90 of the Act read with Article 25 of the Double Taxation Avoidance Agreement betwee....

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....e perused the material on record. It is not disputed by the Revenue that Assessee had paid taxes of INR. 3,36,850/- in USA in respect of income offered to tax. The sole reason for denial of foreign tax credit claimed by the Assessee is that the Assessee had failed to file the Form 67 within the time period specified in filing the return under Section 139(1) of the Act. In this regard we find that it is admitted position that for the relevant assessment year only intimation was issued under Section 143(1) of the Act and no assessment was framed on the Assessee. Further, we note that the Form 67 was filed by the Assessee on 13/09/2024 (i.e. before the expiry of time specified under Second Proviso to Section 143(1) of the Act). The Assessee was also not put to notice about the proposed variation in terms of first proviso to Section 143(1) of the Act. 6. We find that the Bangalore Bench of the Tribunal had, in the case of Ms. Brinda RamaKrishna vs. Income-tax Officer [2022] 193 ITD 840 (Bangalore - Trib.)[17-11-2021] held non-furnishing of Form No. 67 before the due date under Section 139(1) of the Act is not fatal to the claim for foreign tax credit. The Tribunal observed that Rule....

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.... is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi v. CIT(A) NFAC ITA No. 680/Bang./2022 6-9-2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non- adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the du....