TaxTMI 
TaxTMI 
2026 (6) TMI 1026
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....ground of appeal be admitted and adjudicated on merits of the case. 2. Without prejudice and in the alternative, the learned Commissioner of Income Tax (Appeals) has erred in confirming denial of relief under section 90(1)(a)(i) of the Income Tax Act by way of credit of income tax of Rs. 25,47,094/- paid in the United States of America on the ground of the failure of the assessee to furnish form number 67 within the prescribed time. It is prayed that form number 67 be admitted and the relief be granted on the merits of the case." 2. The concise facts of the case are that the assessee filed his return on income for the assessment year 2017-18 on 04.08.2017, declaring total income at Rs. 1,24,02,560/-. The case of assessee was selected for limited scrutiny due to claim of assessee for benefit of section 90/90A seeking tax relief for taxes paid out of India. Statutory notices were issued under section 143(2) and 142(1) of the Act. The counsel of assessee furnished necessary details before the Ld. AO. During the assessment proceedings the Ld. AO observed that the assessee has claimed a relief of Rs. 25,47,094/- under section 90 of the Income Tax Act against the tax....
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....to this appellate authority to condone the same. (iii). The Appellant has argued that FTC is a substantive right flowing from section 90 of the Act read with the applicable DTAA, and that the procedural lapse of non-filing of Form 67 should not defeat this substantive entitlement. Reliance has been placed on certain Tribunal rulings where delayed filing of Form 67 has been condoned. (iv). It has been stated at appellate stage that the stock options were granted and vested in the appellant in the years in which the appellant was a non-resident. Therefore, in the years in which the value of options accrued to the appellant, no perquisite value could be charged to tax in India. Further, in the alternative, the status of the appellant should be adjudicated to be that of 'not ordinary resident' though this status was not so claimed in the return of income. If the appellant can persuade the learned appellate authority to accept this pleading, the value of stock options granted for services rendered outside India should be held to be not accrued in India and therefore, should not be charged to tax by virtue of the proviso to section 5(1)(c) of the Act. (....
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....ek condonation at the appellate stage as a matter of right. 6. In view of the above discussion, I hold that the assessing officer was justified in disallowing the claim of Foreign Tax Credit. The failure of the Appellant to furnish Form 67 within the prescribed time, disentitles him from such relief. The filing of Form 67 four days prior to the completion of the assessment cannot cure the default. 7. Accordingly, the withdrawal of the FTC is confirmed. The appeal on all grounds is dismissed. In result, the appeal is dismissed." 4. Being aggrieved with the aforesaid decision of Ld. CIT(A), confirming the denial of tax credit under section 90, the assessee preferred the present appeal. 5. At the outset, Ld. AR representing the assessee submitted to not press ground no. 1 of the present appeal, which in absence of any objection by the revenue, treated to be dismissed as not pressed. 6. Adverting to the contentions of assessee as per ground no. 2, wherein the assessee has requested for directions that form no. 67 of the assessee be admitted and the relief be granted on merits of the cases. It was a submission that during the year under consideration the asses....
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....rst time produced before the Ld. CIT(A) after the conclusion of assessment but before filing of the appeal. It is also submitted that the requisite form 67 has been filed by the assessee on 12.12.2019, i.e., before passing of the order under section 250 by the Ld. CIT(A) dated 30.09.2025 and requested to consider the same for granting of credit of taxes paid outside India. Alternatively, it is also contended that the income which is included by the assessee as perquisite for the relevant year under the head salary while computing the income taxable in India,was actually not taxable in terms of the additional facts and evidence produced before the Ld. CIT(A).The assessee was not an ordinary resident or non-resident in the years when ESOP perquisites we revested with him. The Ld. CIT(A) was having all such details before him, but had simply brushed aside the contentions of the assessee without adverting to the additional evidences furnished by him, without examining the same or by calling a remand report from the Ld. AO. Ld. CIT(A) observed that this argument cannot be acceded to, while the assessee has negated the timelines prescribed in Rule 28 by not filing form 67 treating the sa....
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.... USA DTAA, that the foreign tax credit shall be denied on failure of submission of statement in form 67, within the due date prescribed under section 139(1) of the Act, that Rule 128(9) of the Income Tax Rules, does not provide for disallowance of FTC in case of delay in filing of form no. 67.Filing of form 67 is not mandatory but a directory requirement and DTAA overrides the provisions of the Act. The Rules cannot be contrary to the Act. Therefore, non-furnishing of form 67 before the due date under section 139(1) of the Act is not fatal to the claim for FTC." Regarding admission of the new claim, first time before the Appellate Authority, the assessee placed his reliance on the following decisions: Sl No. Case Law Citations 1. CIT Vs Pruthvi Brokers & Shareholders Pvt Ltd-Bombay High Court- 349 ITR 336 2. ACIT Vs Siva Equipment Pvt Ltd - ITA No. 424/PNJ/2013 3. Siva Equipment Pvt Ltd - Bombay High Court - 423 ITR 20 4. CIT Vs. Suretech Hospital and Research Centre Ltd - Bombay High Court - 293 ITR 53 5. IP Softcom (India) Pvt Ltd - ITA No. 2764/Chny/2019 7. Considering the aforesaid submissions, facts, circumstances and jurisprudence relied....
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....it ("FTC") for taxes paid in Australia. 3. There is no dispute that the Assessee is entitled to claim FTC. Rule 128 of the Income Tax Rules, 1962 (Rules) provides for giving FTC and reads thus: "Foreign Tax Credit. 128. (1) An assessee, being a resident shall be allowed a credit for the amount 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 o....
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....e the time allowed under section 139(5) of the Act, and therefore Form 67 is nonest in law. The CIT(A) also held that provisions of Rule 128 are mandatory in nature. The CIT(A)rejected the contention of the Assessee that filing of Form 67 is a procedural requirement and noncompliance thereof does not disentitle the Assessee of the FTC. 7. Aggrieved by the order of the CIT(A), the Assessee is in appeal 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 re....
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....les would have specifically provided that the FTC would be disallowed if the assessee does not file Form 67 within the due date prescribed under section 139(1) of the Act. It was submitted that that there are many sections in the Act which specifically deny deduction or exemption or relief in case the return is not filed within prescribed time. Reference was made to section 80AC, 80-IA(7), 10A(5) and 10B(5). Such language is not used in Rule 128(9). Therefore, such condition cannot be read 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 me....
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....) Engineering Analysis Centre of Excellence P Ltd v CIT (2021) 125 taxmann.com 42 (SC) (Pg 106-109 of PB 2-Para 25 & 26) CBDT Circular No 333 dated 2/4/82 137 ITR (St.) It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance of any procedural provision. As the provisions of DTAA override the provisions of the Act, the Assessee has vested right to claim the FTC under the tax treaty, the same cannot be disallowed for mere delay in compliance of a procedural provision. 14. The learned DR reiterated the stand of the revenue that rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to give FTC. He also submitted that the issue was debatable and cannot be subject matter of decision in Sec.154 proceedings which are restricted in scope to mistakes apparent on the face of the record. 15. In his rejoinder, the learned counsel for the Assessee submitted that Form No.67 was available before the AO when the intimation w/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 applic....