Mumbai Bench of Income Tax Appellate Tribunal (ITAT) ruled that delay in filing the Form 67 was not a reason to deny the claim of the Foreign Tax Credit (FTC) under Double Taxation Avoidance Agreements (DTAA).
The appeal was filed by the assessee, Rohan Hattamgdi, challenging the order of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (‘NFAC’) passed under section 250 of the Income Tax Act, 1961.
The assessee, a Resident and Ordinary Resident (ROR) who works for Deloitte India Advisory Services Private Limited (employer), filed his original return of income on June 30, 2020, and his revised return on March 30, 2021, declaring revised total income of Rs. 7,07,390 as opposed to the income stated in the original return of income of Rs. 6,69,620.
The employer had projects in Sri Lanka and the assessee had visited Sri Lanka for a period of 159 days and the assessee was continued to be paid by the employer in India during the said period.
According to the revised return, there is a gross tax obligation of Rs. 56,137. It has been noted that the assessee submitted an amended return of income in order to include the perquisite value of Rs. 37,774, which relates to Sri Lankan taxes paid by the assessee’s employer, as well as a claim for foreign tax relief.
The bench observed that the assessee has filed Form No. 67, providing details for claiming foreign tax relief, amounting to Rs.26,718 as per the terms of Article 23(2) of India Sri Lanka tax treaty, for which FTC is to be allowed as per the provisions of section 90 of the Income Tax Act read with Rule 128 of the Income Tax Rules.
The assessee preferred an appeal before the Commissioner of Income Tax (Appeals), as against the intimation issued by the Centralised Processing Centre (CPC) under section 143(1) of the Income Tax Act.
The CIT(A) rejected the assessee’s grounds for appeal on the grounds that he had submitted both his original and revised returns of income along with Form No. 67, which is mandated for claiming a foreign tax credit after the return of income filing deadline.
The Tribunal of M. Balaganesh (Accountant Member) and Kavitha Rajagopal (Judicial Member) has held that delay in filing Form No. 67 should not deny the claim of FTC enumerated in the DTAA and the intention of the legislation in the said case has to be construed in a manner which benefits the assessee.
Further the authority directed the Assessing Officer to allow the FTC claim of the assessee and to grant refund in accordance with the law.
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