AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 49
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....ssee had claimed FTC of Rs. 2,86,260/- u/s 90/91 of the Act, but did not file the Form-67 before filing the return of income and on realizing the mistake the assessee filed form 67 in support of the FTC credit on 21.02.2022. However, the ITR was processed by the CPC on 12.03.2021 by raising a demand of Rs 3,50,030/- after disallowing the claim of Foreign Tax Credit claimed relief under section 90/91 of the Act of Rs. 2,86,260/-. Being aggrieved, a rectification petition was filed by the appellant before AO.CPC on 24.03.2021 The same was processed and a rectification order u/s 154 was passed by the CPC on 03.04.2021 disallowing the claim of Foreign Tax Credit claimed u/s 90/91 of the Act of Rs. 2,86,260 and raised a demand of 3,52,822/- Aggrieved by the rectification order u/s 154 of the Act, the assessee had filed an appeal before the Ld. CIT(A). 2.1 The ground before the Ld. CIT(A) related to not allowing credit in respect of payment of foreign taxes to the extent of Rs. 2.86,260/- claimed by the assessee in the ITR and the Form 67 filed on 21.02.2022 which was after the due date for filing of RoI u/s139(1) for A.Y. 19-20 for which the extended date was 31.08.2019. During the a....
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....turn much after due date prescribed under section 139(1), same was to be denied as requirement of furnishing declaration before AO before due date of filing original return under section 139(1) was a mandatory condition not directory. It is also pertinent to mention that the Hon'ble Supreme Court in catena of cases had held that any benefit under the provisions of the Act can be claimed only when the Rol and the related Forms are filed within the timelines prescribed by the Act 4.5 Hence, having failed to file the Form 67 within the stipulated time period by the appellant, the FTC has not been allowed and hence, there is no infirmity found in the order of ADIT, CPC and the ground of appeal filed in this regard is dismissed. 5. Accordingly, the appeal of the Appellant is DISMISSED." 3. Aggrieved with the said order, the assessee filed an appeal before us on the following grounds of appeal: "1. That on the facts and in circumstances of the case, the Ld. ADDL/JCIT(A)-4, Chennai has acted arbitrarily, erroneously. contrary to law and against the principles of natural justice while upholding the Intimation u/s 143(1) and/or order u/s 154 of the Ld. Asst....
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....61. 6) The Department has accepted the delayed filing of Form 67 for the y 2020-21 and give the effect of the order of CIT(A) [Refer Page 26 & Page 16-25 of the Paper Book] 7) Hon'ble High Court of Madras in the case of Duraiswamy Kumaraswamy vs PCIT (2023) 156 taxmann.com 445 (Madras) had observed that the filing of Form-67 for claiming Foreign Tax Credit (FTC) in terms of Rule 128 of the Income-tax Rules, 1962, is only a directory in nature 8) There are host of judicial pronouncements, observed that the Foreign Tax Credit (FTC) cannot be denied merely on the ground of delay in filing of Form-67, which is not mandatory but only directory. The Appellant relies upon the Smt. Sonali Verma Vs Income Tax Officer ITA No.778/Hyd/2025." 5. On the other hand, the Ld. Sr. DR supported the orders of the authorities below. 6. We have heard both the parties and perused the material available on record. The Ld. CIT(A) relying upon the decision of ITAT Vizag bench in the case of Muralikrishna Vaddi v. Asstt. CIT/Dy. CIT (supra) upheld the order of the AO. Further, the Ld. CIT(A) also relied upon the decision of Hon'ble Supreme Court in the case o....
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....(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 involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s. 154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s. 154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard." 9. Respectfully we follow the decision (supra). 10. Accordingly, we hereby direct the Ld. AO to allow the impugned credit of FTC to the assessee in the light of the decision in the case of Ms. Brinda Rama Krishna (supra)." 6. Similar view has been taken by the coordinate benches in the following cases: 1. Ajay Kumar Mishra in ITA No.1835/Del/20....
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....reign tax credit is filed. Therefore, it would amount to due compliance under the Act. The petitioner referred to the judgment of the hon'ble Supreme Court in the case of CIT v. G. M. Knitting Industries (P.) Ltd. in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated July 24, 2015, wherein it was held that form 3AA is required to be filed along with the h return of income to avail of the benefit and even if it is not filed, but the same is filed during assessment proceedings but before the final order of assessment is made that would amount to sufficient compliance. 11. The law laid down by the hon'ble apex court in CIT v. G. M. Knitting Industries (P.) Ltd. in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated July 24, 2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without foreign tax credit, however the same was filed before passing of the final assessment order. The filing of foreign tax credit 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 ho....
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....ed view that the provisions of section 10B(8) of the Act is on a different footing, wherein as per this section, if the assessee before the due date for furnishing the return of income under sub-section (1) of section 139, furnishes to the Assessing Officer a declaration in writing that the provisions of this section may not be made applicable to him, the provisions of this section shall not apply to him for any of the relevant assessment years, wherein, in the present appeal, the issue is with respect to grant of Foreign Tax Credit ( FTC) as per Rule 128 of the IT Rules, 1962. In our humble view, the provisions of section 10B(8) of the Act requires factual verification by the AO, if such a claim is made before the AO on the aspect of determination of total income / deduction whereas in respect of grant of FTC by way of Form 67 only relates to grant of FTC as per the provisions of section 90/91 of the Act, with no requirement of determination of the total income filed by the assessee in respect of the FTC claim made by the assessee. In this regard the observations of the Hon'ble Supreme Court made in para nos. 10 and 12 of its order are reproduced as under: "10. Even the s....