CPC denies FTC for late filing of Form 67: ITAT Rules Form Filing Directory not Mandatory [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) ruled that the requirement to file Form 67 for claiming Foreign Tax Credit (FTC) is only directory in nature and not mandatory. 

Preeti Das, (assessee) an individual who was employed with Microsoft Global Services Center (India) Private Limited. She was on an international assignment in the United States from January 2017 to July 2018.

The assessee for the Assessment Year (AY) 2019-20, filed her revised income tax return on March 31, 2020, declaring a total income of Rs. 65,25,060 and claiming FTC of Rs. 7,34,421 under Section 90(2) of the Income Tax Act, read with Article 25(2)(a) of the India-USA Double Taxation Avoidance Agreement (DTAA).

Read More: Telecom towers & PBFs are ‘goods’ & qualify as Inputs under Rule 2(k): CESTAT allows Vodafone Idea to avail CENVAT Credit [Read Order]

However, the Centralized Processing Center (CPC), Bangalore, in its intimation dated February 18, 2021, denied the FTC claim on the grounds that Form 67 was not filed within the prescribed time limit under Section 139(1) of the Act.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (appeals)[CIT(A)]. The CIT(A) dismissed the appeal for Non-prosecution. Aggrieved by the CIT(A) order, the assessee filed an appeal before the ITAT.

HUF Taxation Simplified – Are You Managing Your Family’s Wealth the Right Way?

The Counsel for the assessee argued that Form 67 is a procedural requirement and should not be considered a statutory prerequisite for claiming FTC. The counsel for the assessee relied on several tribunal rulings that have previously held that procedural lapses should not restrict legitimate tax relief.

The counsel for the revenue supported the findings of lower authorities and sought to dismiss the appeal.

Read More: SIB Staff Credit Society Wins Appeal: ITAT Directs CIT(A) to Reconsider Deduction Claim u/s 80P [Read Order]

The two-member bench, comprising Dr. Manish Borad (Accountant Member) and Shri Vinay Bhamore (Judicial Member), observed that Form 67 was filed before CPC processed the return. The tribunal observed that delayed submission of Form 67 should not be grounds for denying FTC.

The tribunal relied on the Judgement of the Madras High Court ruling in Duraiswamy Kumaraswamy v. PCIT, where it was held that the requirement to file Form 67 is directory, not mandatory. The tribunal also relied on a recent ITAT Pune ruling in Samiran Arunkumar Dutta v. DCIT, where FTC was allowed despite Form 67 being filed after the due date.

HUF Taxation Simplified – Are You Managing Your Family’s Wealth the Right Way?

Therefore, the tribunal directed the Assessing Officer (AO) to allow the FTC claim after due verification of Form 67. Thereby the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates