TaxTMI 
TaxTMI 
2026 (2) TMI 1050
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.... 2.The error was purely technical and arose due to the consultant's mistake, for which the taxpayer should not be held responsible. The taxpayer did not intentionally make any incorrect filing but relied on the consultant's to ensure expertise compliance with tax laws. 3. The taxpayer should not bear the burden of the tax liability due to an error committed by a third party (the consultant). It is a matter of fairness and justice that the taxpayer be given an opportunity to rectify the mistake without additional incurring penalties or tax liabilities. 4.Given that the taxpayer is genuinely entitled to claim the DTAA relief, and the only issue at hand is the incorrect filing of forms, it is imperative that justice is served by rectifying this mistake without further penalizing the taxpayer. 5.The order so passed is bad in law & to be set aside. 6.On the ground of principal of natural justice, assessee must be given a chance of hearing." 2. There is a small delay of 27 days in filing present appeal. Having regard to the averments made by assessee/appellant in Para Nos. 5 to 7 of the application/affidavit filed for condonation of delay, w....
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....de a thorough search and at last came to know about the mistake which had crept into. Hence, the assessee e-filed Form No. 67 on 16.12.2024 by selecting AY 2021-22, copy of the Form No. 67 so filed on 16.12.2024 alongwith e-filing acknowledgment downloaded from departmental website bearing number: 754942280161224 is also available in case-file/paper-book. Ld. AR carries us to both originally filed Form 67 on 27.12.2021 and subsequently filed Form 67 on 16.12.2024 and demonstrated that all figures mentioned in both forms are same and matching. In response to a query raised by bench, Ld. AR also made an affirmative statement in open court that the assessee has not claimed any relief/credit u/s 90/90A in AY 2020-21. To demonstrate this fact, Ld. AR has also filed copies of ITR and Computation of total income/tax liability of AY 2020-21. With this submission, Ld. AR prayed that a bonafide technical mistake had occurred on the part of assessee by way of selecting wrong AY 2020- 21 but the assessee has already rectified the same by filing a new Form 67 for AY 2021-22, therefore the assessee must be given the benefit of relief as claimed. (ii) Ld. AR further submitted that even i....
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....l/directory requirement and that FTC being a substantive relief available u/s 90/90A cannot be denied merely for delay or technical lapse in filing of Form No. 67. We re-produce below the relevant portion of the order of Asha Rani Pandya (supra): "4. We have considered the rival submissions as well as relevant material on record. The CIT(A) has confirmed the disallowance of FTC in para 4.1 to 4.3 of the impugned order as under: "4.1 The Appellant is aggrieved by the denial of foreign tax credit of Rs. 20,18,309/-, which according to CPC is not available when form 67 has not been filed before the time limit specified u/s. 139(1). A notice was issued to the Appellant to establish the fact on filing of form no.67 to claim relief of taxes u/s 90. In response to the same, the Appellant, vide letter dated 25/10/2023 submitted that the relief u/s. 90 cannot be denied for non-filing of form 67 since income earned in USA of Rs. 84,53,976/- has been offered to tax in the total income declared of Rs. 20,04,65,150/-. 4.2 The facts of the case and the compliance to the rules laid down u/r. 128 of the Income tax Rules, 1962 are carefully considered. It is an admitted f....
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....e 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. 12. Further, in the present case, the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.2021. 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 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 respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set aside only to the extent of disallowing of FTC claim made by the petitioner and hence, the first respondent is directed to consider only on the aspect of rejection of FTC claim with....
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....ed 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 country or the specified territory outside India; or (b) from the person responsible for deduction of such tax; or (c) signed by the assessee: Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by,-- (A) an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee; (B) proof of deduction where the tax has been deducted. (9) The....
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....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 paid shall be allowed as a credit against the Indian tax but limited to proportion of Indian tax. Neither section 90 nor DTAA provides that FTC shall be disallowed for noncompliance with any procedural requirements. FTC is Assessee's vested right as per Article 24(4)(a) of the DTAA read with Section 90 and same cannot be disallowed for non-compliance of procedural requirement that is prescribed in the Rules. 8. It was further su....
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....sioner, (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 an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. It was submitted that filing of Form 67 as per the provisions of section 90 read with Rule 128(9) is a procedural law and should not control the claim of FTC. 12. It....
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....t Form No.67 was available before the AO when the intimation u/s. 143(1) of the Act dated ITA No.680/Bang/2022 Vinodkumar Lakshmipathi, Bangalore Page 9 of 10 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 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 invol....