Claim of FTC on Payment of Foreign Tax Rejected due to Late Filing of ROI: ITAT directs Re-Adjudication [Read Order]

The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for rejecting the claim of Foreign Tax Credit  (FTC) on payment of foreign tax due to late filing of Return of Income ( ROI).

Shridhar Madhav Diwan, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the rejection of the claim of Foreign Tax Credit on foreign paid tax by the assessing officer due to the late filing of the return of Income under section 139(1) of Income Tax Act,1961.

C.S. Subramaniyam, the counsel for the assessee contended that the assessee applied for the claim of Foreign Tax Credit and furnished the statement in Form 67 with an explanation of the delay in filing the claim.

It was also submitted that Rule 128(9) of the Income Tax Rules does not provide for disallowance of Foreign Tax Credit in case of delay in filing Form No. 67 and, therefore, it had consistently been held by various Benches of the Tribunal that filing of Form No. 67 was a directory requirement, but not a mandatory one.

Kumar Aditya, the counsel for the revenue department contended that when the language employed in Rule 128(9) of Income Tax Rules was clear in its purport in saying ‘certificate or the statement’ shall be furnished on or before the date specified for furnishing the return of income under sub-section (1) of section 139 of Income Tax Act and it was not open for the assessee to contend that it was not a mandatory requirement.

The bench observed that “In view of the provision overriding the provisions of the Income Tax Act, Rule 128(9) of the Income Tax Rules had to read down in conformity thereof and cannot be read in isolation, but it must be read in the context of the Income Tax Act”.

The two-member bench comprising Rama Kanta Panda(Accountant) and K.Narasimha Chary(Judicial) directed the Assessing Officer to verify the details of the foreign tax paid by the assessee on the earnings at foreign source and take a view in conformity with the established by the law while allowing the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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