FTC cannot be Denied If Requirements of Rule 128(9) of the Income Tax Rules Are Not Violated: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has recently, in an appeal filed before it, held that FTC cannot be denied, if requirements of rule 128(9) of the income tax rules are not violated.

The aforesaid observation was made by the Hyderabad ITAT when, an appeal was preferred before it by the assessee, Swaroopa Simhadri, as against the order dated 30/11/2022 passed by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (CIT(A)), for the assessment year 2019-20.

Grievance of the assessee in this matter being that while processing the return of income for the assessment year 2019-20, the CPC, Bengaluru did not consider the Foreign Tax Credit (FTC) under section 90 of the Income Tax Act, 1961 and raised the demand, the facts of the case were that though the assessee happened to be a citizen of US, she came to India for business purpose for more than 182 days, thereby becoming a resident in India and in that capacity, she offered all the incomes from India and abroad and paid the taxes.

However, according to the Revenue, the due date for filing the return of income and Form No. 67 in respect of the assessment year 2019-20, was 31/08/2019, whereas the assessee filed the return of income and form No. 67 on 27/07/2020, based on which the CIT(A) also recorded that in terms of Rule 128(9) of the Income Tax Rules, 1962 such an FTC cannot be allowed to the assessee.

On behalf of the assesssee, it being submitted by Shri Mohd. Afzal, the AR, that it is a fact that the assessee filed the return of income on 27/07/2020 whereas originally, the due date for furnishing the return of income for the assessment year 2019-20 under section 139 of the Income Tax Act was 31/08/2019, but that vide notification No. 35/2020/F.No. 370142/23/2020-TPL, dated 24/06/2020, the CBDT extended such period up to 31/07/2020 and further that it was extended vide notification No. 56/2020/F.No. 370142/23/2020-TPL, dated 29/07/2020, till 30/09/2020, Shri B. Sunil Kumar,  the DR, did not dispute these two notifications.

Hearing the opposing contentions of either sides and perusing the materials available on record, the ITAT Panel consisting of K. Narasimha Chary, the judicial member observed:

“Having gone through the record in the light of these two notifications, I am satisfied that whereas the due date for furnishing the return of income for the assessment year 2019-20 stood extended till 30/09/2020, the assessee filed her return of income on 27/07/2020 along with Form No. 67 and thereby there is sufficient compliance with the requirement of Rule 128(9) of the Rules. However, these two notifications missed the attention of the learned CIT(A), when the impugned order was passed.”

“In these circumstances, I hold that there is no violation of the requirements of Rule 128(9) of the Rules and the assessee is entitled to claim the FTC. Learned Assessing Officer is directed to consider the same and grant relief.”, thus allowing the assessee’s appeal the Hyderabad ITAT held.

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