Form 67 Filed in Time Under Amended R. 128(9): ITAT Allows ₹49.65 Lakh FTC [Read Order]

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed a Foreign Tax Credit (FTC) claim of Rs. 49,65,491 and set aside the the Commissioner of Income Tax (Appeals) [CIT(A)]’s order, as Form 67 was filed within the timeline prescribed under the amended Rule 128(9) of the Income Tax Rules, 1962.

Vishal Negi (assessee) filed his return of income for AY 2022-23 declaring a total income of Rs. 89,74,680 and claiming an FTC of Rs. 49,65,491 for taxes paid outside India. The return was processed and an intimation was issued by raising a demand of Rs. 31,07,910.

The AO denied the FTC, citing the non-filing of Form 67 on or before the due date for filing the return of income under Section 139(1) of the Act. Aggrieved by the AO’s action, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO’s decision.

Aggrieved by the CIT(A)’s order, the assessee then appealed to the ITAT. The counsel for the assessee argued that the CIT(A) erred in rejecting the FTC claim. The counsel highlighted that Rule 128(9) of the Income Tax Rules, 1962, was amended via a CBDT notification dated 18/08/2022, effective from AY 2022-23.

The counsel submitted that under the amended rule, Form 67 must be furnished on or before the end of the assessment year relevant to the previous year in which the income was offered or assessed to tax, provided the return of income was filed within the time specified under Section 139(1) or 139(4) of the Income Tax Act.

The counsel submitted that since the assessee filed the return on 30/07/2022 (within the due date) and Form 67 on 15/12/2022 (before the end of AY 2022-23, i.e., 31/03/2023), the FTC claim was valid. The counsel argued that the CIT(A) ignored these facts and relied on the pre-amended rule.

The two-member bench comprising Manjunatha G. (Accountant Member) and Ravish Sood (Judicial Member), observed that the assessee had filed the return of income on 30/07/2022, within the due date under Section 139(1), and claimed the FTC.

The bench observed that the AO’s denial of the FTC was based on the pre-amended Rule 128(9), which required Form 67 to be filed by the return filing due date. It also observed that the assessee filed Form 67 on 15/12/2022, well before deadline as per amended rule.

The Tribunal set aside the CIT(A)’s order and directed the AO to allow the FTC of Rs. 49,65,491 as claimed in the return, considering the Form 67 filed on 15/12/2022, which provided details of the income and taxes paid abroad. The appeal filed by the assessee was allowed.

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