The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that mere delay in filing form no.6 u/r 128 (9), is not a ground to deny foreign tax credit.
The aforesaid observation was made by the Mumbai ITAT, when an appeal was filed before it by an assessee, challenging the impugned order dated 07/09/2022, passed under section 250 of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [CIT(A)], which in turn arose from the intimation dated 17/03/2021, issued u/s 143(1) of the Income Tax Act, for the assessment year 2019–20.
The issues involved in the assessee’s being as to whether, considering the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) / National Faceless Appeal Centre (NFAC), has erred in confirming the action of the Assessing Officer in denying Foreign Tax Credit of Rs.14,86,291/- and thereby raising demand of Rs.21,61,850/- under section 143(1) of the Income-tax Act, 1961, and also as to whether he has not disputed the allowability of the Foreign Tax Credit, on the ground that Form 67 has not been filed on or before the due date of filing return of income as per Rule 128(9) of the Income Tax Rules, 1962, which speaks about a resident assessee’s right to claim an amount of any foreign tax paid by him in a country or specified territory outside India, the brief facts of the case were that the was an individual, who for the year under consideration, had filed his return of income belatedly on 31/10/2020, declaring a total income of Rs.64,42,150.
The assessee in his return of income, having claimed foreign tax credit of Rs.14,86,291 and also filing Form no.67, in this regard on the same date, the return of income filed by the assessee was processed vide intimation dated 17/03/2021 issued under section 143(1) of the Income tax Act, whereby the foreign tax credit of Rs.14,86,291, as claimed by the assessee under section 90 / 90A of the Income tax Act was denied.
Being aggrieved, the assessee preferred an appeal against the same before the CIT(A), who, vide the impugned order, dismissed the appeal filed by the assessee on the basis that Form no.67 was not filed by the assessee before the due date of furnishing of return of income under section 139(1) of the Income tax Act.
And it is being agitated by the same, that the assessee has preferred the instant appeal before Mumbai ITAT.
During the hearing, with Shri Tanzil R. Padvekar a/w Shri Gopal Sharma, the Authorised Representatives for the assessee , having submitted that in the present case, the assessee had filed his return of income belatedly on 31/10/2020, and also filed Form no.67, in order to claim the credit of tax paid outside India, as per the provisions of section 90/90A of the Income Tax Act, they contended that the provisions of section 90/90A of the Income Tax Act are substantive provisions and provisions of Rule 128 cannot override the same.
With the AR, in support of his submissions, having relied upon the decision of the Co–ordinate Bench of the Tribunal, Smt. Mahita Nair, the Departmental Representative, on the other hand vehemently relied upon the order passed by the lower authorities.
Hearing the opposing contentions of either sides and thereby perusing the materials available on record, the Mumbai ITAT observed:
“We find that in another decision in Anuj Bhagwati vs DCIT, the coordinate bench of the Tribunal vide order dated 20/09/2022, while deciding a similar issue, has held that section 90/91 of the Income tax Act has not been amended insofar as grant of foreign tax credit is concerned and Rules cannot override the Act and therefore filing of Form No. 67 is not mandatory but it is directory”.
“Thus, respectfully following the aforesaid decisions of the coordinate bench of the Tribunal, we are of the considered opinion that mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as it stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India.”, the Bench comprising of Om Prakash Kant, the Accountant Member, along with , Sandeep Singh Karhail ,the Judicial Member noted.
Thus, partially allowing the assessee’s appeal, the Mumbai ITAT held:
“Since in the present case, the claim of the assessee was denied on this technical aspect without going into the merits, therefore, we deem it appropriate to direct the jurisdictional Assessing Officer to decide the claim of the foreign tax credit on merits, after accepting the Form No. 67, and other related documents filed by the assessee.”
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