Foreign Tax Credit cannot be Denied if Form 67 Prescribed under Rule 128 of Income Tax Rules not Filed but filed before Completion of Assessment: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the foreign Tax Credit (FTC) could not be denied if form no.67 prescribed under rule 128 of the Income Tax Rules were not filed before the completion of the assessment.

The Appellant,Yogesh Dnyandeo Kinage was an individual resident. During the previous year relevant to the Assessment Year 2018-19, the Appellant was deputed to Netherland till 11/11/2017. The Appellant stayed in India for 140 days. During four years preceding the relevant previous year 2017-18, the Appellant’s stay in India was more than 365 days.

Further, during 7 years preceding the relevant previous year 2017-18, stay of the Appellant in India exceeded 729 days. The Appellant qualified as a resident and ordinarily resident in India as per the provision of Section 6(1) of the Income Tax Act.

The Appellant filed a return of income for the Assessment Year 2018- 19 on 28/08/2018, which was revised on 29/03/2019. In the revised return of income, the Appellant declared total income (including salary and perquisite received in Netherland) and claimed a relief under Section 90 of the Income Tax Act. Prior to filing revised return of income as aforesaid, the Appellant also filed Form 67 on 27/03/2019 for claiming relief under Section 90 of the Income Tax Act.

The revised return filed by the Appellant was processed under Section 143(1) of the Income Tax Act and intimation, dated 28/03/2020, was issued to the Appellant raising a demand as opposed to refund claimed by the Appellant. As per the intimation issued under Section 143(1) of the Income Tax Act relief under Section 90 of the Income Tax Act claimed by the Appellant was denied.

The Appellant filed the first rectification application on 09/04/2020 requesting for grant of credit of taxes paid in the Netherlands. The aforesaid application was rejected vide order, dated 25/06/2020, passed under Section 154 of the Income Tax Act.

Ketan Ved, appeared on behalf of the assessee and Sridhar Govind Menon, appeared on behalf of their venue.

The two-member Bench of Prashant Maharishi, (Accountant Member) and Rahul Chaudhary, (Judicial Member) allowed the appeal file by the assessee observing that, In the present case Form No. 67 had been filed by the Appellant before the processing the return of income under Section 143(1) of the Income Tax Act.

The Bench further referred to the decision of the Mumbai Bench of the Tribunal in the case of Sonakshi Sinha which held that, “The assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income.”

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