Form 67 Submitted before Conclusion of Assessment: ITAT Allows Relief of Withholding Tax Credit in Tanzania against Tax Liability arising in India [Read Order]

The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has recently, in an appeal filed before it, allowed relief of withholding tax credit in Tanzania against tax liability arising in India, on form 67 being submitted before conclusion of the assessment.

The aforesaid observation was made by the Kolkata ITAT, when an appeal was preferred before it by the appellant,Satreena Consultants Pvt. Limited,for the assessment year 2017-18,as directed against the orderof the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 25.08.2022,which is arising out of the order under section 154 read with section 143(1) of the Income Tax Act, on 23.02.2021 framed byDCIT, CPC, Bengaluru.

The grounds of appeal raised by the assesseebeing that the lower authorities erred in not giving thebenefit of foreign tax credit under section 90 to the extentof INR 7,38,649/, that the entire adjustment under 143(1) is null andvoid as the same was issued without a notice under143(1)(a), and further that the lower authorities erred in invoking Rule 128read with the requirement of filing Form 67 which was neverin place at the time of filing of return, the brief facts of the case were that the assesseewas a private limited company, engaged in providing Tea Consultancy Services inTanzania, who had filed its return of incomeon 06.07.2017 for A.Y. 2017-18.

The payment for providing Tea ConsultancyServices for the F.Y. 2015-16 from Tanzania being receivedafter deduction of withholding taxes of Rs.21,24,975/, the income of Rs.24,72,879/ was declared in the income taxreturn filed in India, and relief under section 90 of the Income Tax Actwas claimed towards withholding taxes paid in Tanzaniaagainst the tax liability in India at Rs.7,38,649/-.

However, this claim of the assessee was denied for notfiling Form 67, which as per the Central ProcessingCentre was mandatory to claim relief under section 90 ofthe Income Tax Act. Thereafter, the assessee filed a revised return on20.09.2018 and also filed Form 67 alongwith it. Yet, theassessee failed to get any relief.

Subsequently, the assesseeonce again filedrectification application under section 154 of the Income Tax Act, butthe relief under section 90 was denied on the ground ofalleged delay in filing Form No. 67.

Aggrieved, the assessee preferred an appeal before the CIT(Appeals) and reiterated the submissions madebefore the Assessing Officer. But the delay insubmission of Form No. 67 was not condoned and theassessee was not granted foreign tax credit. And, it is being aggrieved by the same, that the assessee is now in appeal before the Kolkata ITAT.

Hearing the opposing contentions of either sides as submitted by Shri Akshay Ringasia, CA, on behalf of theassessee and Shri Vivek Verma, theCIT, D.R.,on behalf of theRevenue, the ITAT observed:

“We have heard the rival contentions and gonethrough the relevant records placed before us. The onlyissue for our consideration is regarding relief undersection 90 of the Act at Rs.7,38,649/- claimed by theassessee but denied by both the lower authorities fordelay in filing Form No. 67. We observe that it is not indispute that the assessee earned income from Tanzaniaand Rs.21,24,975/- was deducted as withholding tax andthe credit for the same was claimed as relief undersection 90 of the Act against the tax liability arising inIndia at Rs.7,38,649/-. We notice that for the purpose offoreign taxcredit, Rule 128(8) of the Income Tax Rulesprovides the procedure wherein for the purpose of creditof any foreign tax shall be allowed on furnishing variousdocuments, which includes Form No. 67, which is astatement of income from the country or specifiedterritory outside India offered for tax for the previousyear of foreign tax deducted or paid on such income andthe same needs to be verified in the specified manner,which includes any one of the three, namely, taxauthority of the country, or specified territory outsideIndia or from the person responsible for deduction ofsuch tax or signed by the assessee. There are certainother requirements, which need to be fulfilled for thepurpose of filing Form No. 67.”

“Now our attention was drawn towards theNotification issue d by the Central Board of Direct Taxeson 18^th August, 2022. The time limit for filing the Form67 was before the last date of filing the return undersection 139(4) of the Act and the method of filing Form67 was prescribed on 19.09.2017. Further we find thatthe method of filing Form no. 67 was prescribed on19.09.2017 i.e., after the date of filing the return ofincome by the assessee. It is also not in dispute that thelast date for filing the return under section 139(4) of theAct for A.Y. 2017-18 was 31.03.2019 and the assesseefiled Form 67 on 28.09.2018 alongwith revised return.Under these given facts and circumstances, where theassessee filed the original return on 06.07.2017 whenthere was no mechanism for filing Form No. 67, as itcame into effect on 19.09.2017 and thereafter before theexpiry of the due date prescribed under section 139(4) ofthe Act, the assessee furnished Form 67 and also filedthe revised return.”, the ITAT Bench commented.

Further adding to the same, the ITAT Panel comprising of Manish Borad, the Accountant Member, noted:

“I am of the considered view that theclaim of the assessee towards withholding taxes paid inTanzania is to be given against the tax liability on theincome declared in India. Even otherwise filing of Form67 has been held to be directory in nature by theCoordinate Bench, Mumbai in the case of Sonakshi Sinhavs.CIT(A). I, therefore, respectfully following the decisionreferred to hereinabove and the discussion made,direct the ld. Assessing Officer to allow the claim of theassesee made in From No. 67 and give benefit of relief ofwithholding tax credit in Tanzania against the taxliability arising in India.”

Thus, allowing the assessee’s appeal, the Kolkata ITATheld:

“Accordingly, all the effective grounds raised by the assessee in the instant appeal areallowed. In the result, the appeal of the assessee isallowed.”

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