AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 389
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....der Section 143(1) of the Income Tax Act, 1961 without appreciating the submissions of the appellant. 4. The learned Commissioner of Income Tax (Appeals) erred in upholding the order of the CPC Bangalore u/s 143(1) in making adjustments and disallowing the Foreign Tax Credit (FTC) while processing the return under Section 143(1). The said adjustment involves a debatable issue which cannot be rectified or adjusted under the limited scope of Section 143(1). Hence, the addition made is invalid and liable to be deleted. 5. The learned CIT(A) erred in upholding the disallowance of the Foreign Tax Credit merely on technical grounds relating to the filing of Form-67 after the due date, without appreciating that the appellant had duly paid foreign taxes accordingly. 6. The learned CIT(A) failed to appreciate that the appellant had substantially complied with the provisions of Rule 128 by furnishing Form-67 and supporting documents before completion of assessment, and that the delay was procedural in nature and should not deny a substantive relief. 7. The learned CIT(A) erred in passing the order without granting proper opportunity of being heard to the a....
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....67. Thereafter, the assessee uploaded the proof of tax paid in USA on 25.08.2022 but the credit was not given by the CPC. Thereafter, the assessee also filed an application for rectification of mistake u/sec.154 of the Act but the same was rejected vide order dated 03.03.2023. The assessee challenged the Order of the CPC before the learned CIT(A) but the appeal of the assessee was dismissed by the learned CIT(A) while passing the impugned order. The learned Authorised Representative of the Assessee has submitted that the return of income was filed by the assessee voluntarily and in full compliance with the provisions of law. The assessee also complied with the provisions of Rule 128 r.w.s.90 of the I.T. Act, 1961 for claiming the FTC by filing the Form-67 on multiple occasions. He has thus submitted that denial of the FTC to the assessee amounts to double taxation of the same income which is against the provisions of sec.90 as well as DTAA between India and USA. In support of his contention, he has relied upon the following decisions: (i) Order of ITAT, Hyderabad Bench in the case of Smt. Sonali Verma, Secunderabad vs. ITO, Ward- 12(6), Hyderabad in ITA.No.778/Hyd./2025 da....
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....l and one of us [Shri Vijay Pal Rao, Vice President] is party to the Order dated 30.07.2025 in the case of Smt. Sonali Verma, Secunderabad vs. ITO, Ward-12(6), Hyderabad (supra), in Para nos.5 to 7 held as under: "5. We have considered the rival contentions as well as the relevant material available on record. There is no dispute that the assessee has declared the salary income earned in US in the revised return of income filed on 23/02/2021 and also claimed FTC by filing Form-67 along with the revised return. Thus, before the revised return, the assessee has neither declared the salary income earned in the US, nor claimed FTC. When the revised return of the assessee was filed within the limitation provided under section 139(5) of the Act, then the claim of FTC of the assessee is linked with the foreign income declared in the revised return. Even otherwise, this issue of denial of FTC on the ground of delay in filing Form-67 has been considered by this Tribunal in a series of decisions wherein a consistent view has been taken and in the case of Shri Sridharan Venkatanarayanan vs. Dy. CIT in ITA No.32/Hyd/2025 dated 27/03/2025, the Tribunal has considered an identical issue....
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....te that in the case of the assessee there was a TDS deducted by the Foreign Government to the extent of Rs. 95,539/- which was claimed as Foreign Tax Credit in accordance with section 91 of the I.T. Act, 1961. The CPC while processing the return u/s 143(1) dated 22/03/2022 disallowed the claim of Foreign Tax Credit on the ground that the assessee has not filed Form 67 within the prescribed limit i.e. 31st Dec. 2021 in case of the assessee. The assessee filed Form 67 on 6/8/2022 and challenged the order of the CPC before the learned CIT (A) but could not succeed. At the outset, we note that there are series of decisions on this point as relied upon by the learned AR of the assessee. In case of 42 Hertz Software India (P) Ltd vs, ACIT (Supra), the Bangalore Bench of the Tribunal has held in para 6 to 8 as under: "6. There is no dispute that the Assessee is entitled to claim FTC. On perusal of provisions of rule 128 (8) & (9), it is clear that, one of the requirements of rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is b....
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....ection 90 of the Act read with Article 24(3)(0) of DTAA provides in no uncertain terms that Italian tax paid shall be allowed as credit against Indian Tax. Neither Section 90 nor DTAA provides that FTC shall be disallowed for mere non- compliance with any procedural requirement of enabling nature. The assessee thus contended that FTC is assessee's vested right as per Article 24(3)(a) of the DTAA r. w. section 90 of the Act and such FTC approved to the assessee cannot be denied on the grounds of non-compliance of procedural requirements prescribed in the Rules which are subservient to the Act as well as DTAA. The assessee further contended that provisions of DTAA override the provisions of the Income Tax Act and thus denial of vested right to claim the FTC is in direct infringement of the tax treaty. 8. Rule 128 (8) and (9) provides that the credit for any foreign tax shall be allowed on furnishing of Form 67 on or before the due date of filing the return of income as prescribed under Section 139(1) of the Act. The question thus arises as to whether where a substantial compliance has been made and Form 67 has been eventually filed albeit after the due date of filing of ....
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....the decision of the Bangalore Tribunal in the case of 42 Hertz Software India (P.) Ltd. (supra), was brought to the notice of the Bench, but looking at the abnormal delay of more than two years without any valid and reasonable cause, the Bench held that such delayed filing of Form 67 was in compliance with rule 128(9) of the Rules. 7. Coming to the decisions relied upon by the assessee it could be seen that in the case of Hertz Software India (P.) Ltd. (supra), reliance was placed on the decision in Ms. Brinda Ramakrishna (supra) and all the other decisions were following of the same. In Ms. Brinda Ramakrishna (supra), the Bench considered the issue in the light of the provisions of DTAA, section 295(1) of the Act, the decisions of the Hon'ble Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner 1992 (1) Supp SCC 21, Sambhaji v. Gangabai [2008] 17 SCC 117 and a lot many decisions of the Hon'ble Apex Court including the case in Union of India v. Azadi Bachao Andolan [2003] 132 Taxman 373/263 ITR 706 etc. and reached a conclusion that since Rule 128(9) of the Rules does not provide for disallowance of FTC in the case of delay in fil....
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....ndent 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 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 within a period of 8 weeks from the date of receipt of copy of this order." 9. Accordingly, in view of the series of decisions of this Tribunal as well as to maintain the rule of consistency with the decisions of the Coordinate Benches and the decision of the Hon'ble Supreme Court in the case of Vegetable Product....
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....f the A.Y is 31/03/2023. The assessee has filed Form 67 on 15/12/2022, which is well before the due date for furnishing the relevant form. Although these facts have been brought to the notice of the learned CIT (A), but the learned CIT (A) rejected the claim of the assessee by considering the pre-amended rules. Therefore, we are of the considered view that the learned CIT (A) is erred in upholding the reasons given by the Assessing Officer to deny credit for Foreign Tax Credit. Thus, we set aside the order of the learned CIT (A) and direct the Assessing Officer to allow credit for Foreign Tax Credit as claimed by the assessee in the return of income by considering the relevant form 67 filed on 15/12/2022 indicating the details of income and taxes paid outside India and delete the demand raised by rejecting the credit for Foreign Tax Credit. We order accordingly. 7. Accordingly, to maintain the rule of consistency, we follow the earlier decisions of this Tribunal and hold that the claim of FTC cannot be denied merely on the ground of delay in filing Form-67 without considering the fact that the assessee has filed the revised return declaring the salary earned in US and alon....