Foreign Tax Credit cannot be Denied for Technicality of not Filing Form 67 within Due Date of Return u/s 139(1) of Income Tax Act: ITAT [Read Order]

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the foreign tax credit could not be denied for technicality of not filing form 67 within the due date of return under Section 139(1) of the Income Tax Act 1961.

The assessee, Mahua Bagchi was an employee of Cognizant Technology Solutions India Pvt. Ltd since 1999 and was transferred to the UK in May, 2008 and worked in the UK till September, 2020. Thereafter the assessee was again transferred to India. The assessee got benefits from the employer in the form of equity shares granted to her under Employee Stock Option Plan (ESOP) and restricted stock.

These stocks got vested over a period of four years if the assessee worked for the said employer company under ESOP. The profit which goes to the assessee would be determined on the basis of grant price of $19.66 and the sale price. Accordingly, the tax was deducted in the UK amount which was claimed by the assessee as foreign tax under Section 90 of the Income Tax Act.

However, Form-67 as required to be filed on or before filing the return of income under Section 139(1) of the Income Tax Act was not filed. The assessee filed the return of income after the due date and also filed Form-67 with the delay of two and a half years from the date of filing return. The AO CPC passed the order under Section 143(1) of the Income Tax Act dated 28.03.2019 and the claim was allowed in respect of foreign tax.

However, when the assessee filed the form 67 in respect of foreign tax deducted, the AO by passing order under Section 154 of the Income Tax Act and withdrew the foreign tax credit on the ground that the assessee had filed Form-67 two and a half years after the due date of filing the return.

Somnath Ghosh, appeared on behalf of the Assessee and Ranu Biswas, appeared on behalf of the revenue.

The two-member Bench of Yadav, (Vice President) and Rajesh Kumar, (Accountant Member) noted  the assessee served abroad and some foreign tax to some  was deducted in United Kingdom under DTAA between India and UK and provision of Section 90(2) of the Act. We also note that Rule 128 sub-Rule 9 provides that Form-67 should be filed on or before the due date of filing the return of income

The Bench allowed the appeal filed by the assessee the credit in respect of foreign tax cannot be denied to the assessee for the technicality of not filing the form 67 within the due date of return under Section 139(1) of the Income Tax Act.

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