Consider GST Registration and Import Export Certificate for Proprietor Claim: ITAT Remands FTC Matter for Verification [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and directed to verify the assessee’s claim as proprietor of M/s Blue Lion Entertainment Company through GST registration and import export certificates.

Hirachand Damji Dand (assessee), proprietor of M/s Blue Lion Entertainment Company had claimed Foreign Tax Credit (FTC) under Section 90 of the Income Tax Act, 1961, amounting to Rs. 4,88,188/- for AY 2019-20 and Rs. 1,72,931/- for AY 2020-21, for taxes withheld by a Kenyan company under the India-Kenya Double Taxation Avoidance Agreement (DTAA).

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The Centralized Processing Centre (CPC) disallowed the FTC claims because Form 67, a mandatory requirement for claiming FTC, was not filed with the original returns of income. The assessee filed Form 67 belatedly which was rejected by the CPC.

Aggrieved by the CPC’s order, the assessee filed an appeal before the CIT(A). The CIT(A) upheld the rejection for withholding certificates being in the name of Blue Lion Entertainment Company, while the return was filed in the assessee’s individual name.

The CIT(A) also observed that there was no indication of the assesses’s proprietor claim on the Blue Lion entertainment company. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT.

The counsel for the assessee argued that the GST registration certificate and import export code certificate, submitted before the CPC and placed in the paper book, clearly established the assessee as the proprietor of Blue Lion Entertainment Company.

The counsel contended that the CIT(A) erred in not considering these documents. The counsel also cited the ITAT’s decision and argued that the late filing of Form 67 was a directory, not mandatory requirement.

The two-member bench comprising Raj Kumar Chauhan (Judicial Member) and Vikram Singh Yadav (Accountant Member) observed that the GST registration and import export certificates submitted by the assessee to be considered for Proprietorship claim of Blue Lion Entertainment company.

The tribunal held that the documents submitted by the assessee required due verification by the revenue authorities to determine eligibility for FTC. The tribunal set aside the CIT(A)’s orders and remanded the matter to the AO with directions to verify the genuineness of the GST and import export certificates.

The tribunal also directed to reconsider the FTC claim. The tribunal directed the AO to provide the assessee a reasonable opportunity of being heard, and the assessee was instructed to present the case within 60 days of the order. The appeal of the assessee was allowed for statistical purposes.

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