The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the Claim of Foreign Tax Credit( FTC) can’t be disallowed merely on delay in filing Form 67.
Tom Thomas, the Appellant/Assessee has challenged the order, dated 22.11.2021, passed by the Commissioner of Income Tax (Appeals), [CIT(A)] whereby appeal filed by the Appellant against the Rectification Order, dated 31.07.2020 passed under Section 154 of the Income Tax Act, 1961 was partly allowed.
The Appellant was working in India with Asian Paints Ltd. During the Financial Year 2017-18 the Appellant was transferred to the Singapore unit of the Company with effect from January 2018. Thus, based on the number of days of stay of the Appellant in India, the residential status of the Appellant was ‘Resident and Ordinarily Resident’ (‘ROR’) in India for the Assessment Year 2018-19 and the global income of the Appellant was taxable in India.
The Appellant filed its return of income in India offering salary income from Singapore in India. The Appellant filed a revised income tax return in India on 28.03.2019 offering INR 4,30,399/- as taxable perquisite and claiming Foreign Tax Credit (FTC) of INR 430,399/- as per section 90(2) of the Act read with Article 25 of the India-Singapore Tax Treaty (‘the Tax Treaty’). Along with the revised return the Appellant also filed Form 67 support his claim for FTC of INR. 430,399/-.
The CIT(A) confirmed the action of the Assistant Director of Income Tax, CPC, Bangalore in rejecting the claim of the Appellant for the foreign tax credit of INR 4,30,399/- under Section 90 of the Act in respect of taxes paid in Singapore.
It was contended that the FTC of INR 4,30,399/- was claimed by the Appellant as per the provisions of Section 90(2) of the Act read with Article 25 of the Tax Treaty.
A Coram comprising of Shri M. Balaganesh, Accountant Member and Shri Rahul Chaudhary, Judicial Member held that the requirement of filing Form 67 is a directory in nature which is evident from the fact that Rule 128(9) does not contemplate disallowance of FTC in case of delay in complying with such condition.
While allowing the appeal of the assessee, the Tribunal further held that the Appellant‟s claim for FTC cannot be denied for the reasons mentioned by the CIT(A). The Appellant is entitled to claim FTC of INR 4,30,399/- on the strength of Form 67 filed along with the revised return and the Assessing Officer is directed to grant the same.
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