Violation of Procedural Norm does not Extinguish Substantive Right to Claim FTC: ITAT [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the violation of procedural norm would not extinguish the substantive right of claiming the Foreign Tax Credit (FTC).

The assessee-Sandeep Patwari was an individual employed with Qualcomm India Private Limited. For the assessment year 2020-2021, the return of income was filed on 30.03.2021 disclosing income from salary, house property, capital gains, interest and dividend.

According to the assessee, the assessee had offered to tax in India, salary earned abroad and paid taxes on the same. The assessee had claimed FTC under Section 90/91 of the Income tax Act on the taxes paid abroad.

The assessee received intimation under Section 143(1) of the Income Tax Act dated 25.11.2021, wherein the foreign tax credit (FTC) was not granted. The assessee filed rectification under Section 154 of the Income Tax Act on 14.12.2021. The rectification order was passed not granting the claim of the assessee.

Navaneeth N.Kini, who appeared on behalf of the assessee submitted that Rule 128 of the Income Tax Rules was only directory and could not be taken as mandatory..

Sunil Kumar Singhe appeared on behalf of the revenue and supported the orders of the lower authorities.

The two-member Bench of George George K, (Judicial Member) and Laxmi Prasad Sahu, (Accountant Member) allowed the appeal filed by the assessee referring to the decision in Brinda Ramakrishna v. ITO held that filing of Form 67 was a procedural / directory requirement and not a mandatory requirement. It was held that violation of the procedural norm would not extinguish the substantive right of claiming the credit of FTC.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates