Delay in filing Form 67 can’t be a reason to deny Foreign Tax Credit: ITAT [Read Order]

The ITAT, Bangalore bench, consisting of members Beena Pillai (Judicial Member) and Chandra Poojari (Accountant Member) has ruled that Rule 128 of the Income Tax Rules which requires the assessee to submit Form 67 before filing the income tax return for claiming Foreign Tax Credit (FTC) is directory in nature and not mandatory, thus Foreign Tax Credit (FTC) cannot be denied for delay in filing Form 67.

The assessee is a private limited company engaged in the business of software publishing consultancy and supply operating system software, business and other application software, computer games etc. It filed its return of income on 29/11/2017 declaring total income of Rs.1,36,89,850/-. During the assessment proceedings, the AO noted that Assessee claimed Foreign Tax Credit (FTC) of Rs.43,46,900/- u/s.90/91 in respect of tax withheld by Japan. As per India-Japan DTAA.

The bench observed that the Assessee is entitled to claim FTC.

“On perusal of provisions of Rule 128 (8) & (9), it is clear that, one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67.,” the bench said.

Granting relief to the assessee, the ebnch held that “that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee.”

To Read the full text of the Order CLICK HERE

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