The Bangalore Bench of Income Tax Appellate Authority ( ITAT ) ruled that Foreign Tax Credit should not be denied just because of late filing of Form 67. The tribunal emphasized that Form 67 is directory rule, not mandatory under Rule 128 of the Income Tax Rules, 1962.
Basavalinga Sadasivaiah Ajaikumar, the assessee filed his original income tax return on 31-08-2019 and revised the return on 19-06-2020. The assessee submitted Form 67 to claim the foreign tax credit of Rs.52,43,835 but the revenue denied the FTC claim due to the late filing of Form 67.
The revenue issued intimation notice to the assessee generated under Section 143(1) of the Income Tax Act on 17-03-2021. On appeal, the Commissioner of Income Tax (Appeals) dismissed the assessee’s claim.
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Aggrieved by the CIT(A) order, the assessee appealed before the Bangalore Bench of ITAT arguing that the revised return that included the FTC claim was filed before the issuance of the intimation under Section 143(1) of the Income Tax Act. Thus the FTC should have been allowed.
On the other hand, the revenue counsel supported the orders of the authorities.
The two-member bench comprising Waseem Ahmed (Accountant Member) and Soundararajan K (Judicial Member) noted that the claim for FTC was made in the revised return and before the issuance of the intimation.
The tribunal emphasized that the Revenue should have granted the benefit of the foreign tax credit to the assessee, even though Form 67 was not submitted along with the original return.
The tribunal referred to the Bangalore tribunal ruling in the case Sanjeev Gopal vs ADIT where it was held that non-compliance with procedural norms should not override the provisions of Section 90 of the Income Tax Act, which allows FTC.
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The tribunal concluded that Form 67 is a directory and not mandatory and its late submission should not result in the denial of FTC. Therefore, the tribunal directed the assessing officer to allow the FTC claim after due verification under the law. The appeal of the assessee was allowed.
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