The Income Tax Appellate Tribunal (ITAT) Pune Bench, has recently, in an appeal filed before it, ruled that the filing of Form 67 is a procedural requirement, and hence that the non-compliance of the same, cannot attract denial of FTC.
The aforesaid observation was made by the Pune ITAT, when an appeal was filed before it by the assessee, as against the order dated 07-12-2022passed by the National Faceless Appeal Centre, Delhi (NFAC), for assessment year 2020-21.
The only issue in the assessee’s appeal being as to whether the CIT(A), NFAC, Delhi, can be justified in confirming the disallowance of Foreign Tax Credit (FTC), in the facts and circumstances of the case, Shri Ramnath P. Murkunde, on behalf of the Revenue made his submissions before the Pune ITAT, while no representation was made before the ITAT, on behalf of the appellant.
Therefore, hearing the DR and perusing the material available on record, the Pune ITAT noted:“On perusal of the impugned order, we note that Form No. 67 was filed by the assessee before filing of return of income which is evident from page 4 of the impugned order. It is also noted that the assessee contended that he tried to file rectification application u/s. 154 of the Income Tax Act, but however, due to technical glitches at on-line Income Tax portal, he could not file the same. Further, he also contended that filing of Form No. 67 is a procedural requirement and is not a mandatory, further, right of claim of FTC does not extinguish for violation of a procedural requirement. Having examined the record, we note that nowhere in the impugned it is reflected as the date of filing of Form No. 67 and therefore it is to be understood the assessee filed Form No. 67 before filing of return of income u/s. 139(4) of the Income Tax Act as is evident from page 4 of the impugned order.”
“Admittedly, the statutory provisions u/s. 90, the assessee entitled to claim FTC and in order to claim the taxes paid outside India, Rules are contemplated under Rule 128 of Income Tax Rules, 1962, wherein, Subrule (8) of Rule 128 provides procedure in furnishing the documents mentioned therein in clauses (i) & (ii). We note that CIT(A), NFAC, Delhi reproduced the said Rule at page 3 of the impugned order. On careful reading of the said Rule, we note that, clause (i) of Sub-rule (8) of Rule 128 explains furnishing a statement of income from the country or specified territory outside India offered for tax for the previous year and foreign tax deducted or paid on such income in Form No. 67 duly verifying the manner in which specified therein. Admittedly, it is not clear, as discussed above the date of filing of Form No. 67 as required under clause (i) of Sub-rule (8) of Rule 128 of the Income Tax Rules, 1962 in the impugned order. Thereby, denying FTC, in our opinion, is not warranted.”, the ITAT Panel comprising of Inturi Rama Rao, the Accountant Member, and S.S. Viswanethra Ravi, the Judicial Member, observed.
Thus, allowing the assessee’s appeal, the Pune ITAT held:
“We hold Rules cannot override statutory provisions, as section 90 of the Act provides allowance of Foreign Tax Credit which is denied for alleged violation of procedures requirement. Therefore, we find filing of Form No. 67 under clause (i) of Sub-rule (8) of Rules 128 of the Income Tax Rules, 1962 is a procedural requirement, therefore, is a directory in nature, noncompliance thereof does not disentitle the assessee in claiming Foreign Tax Credit. Thus, in view of the discussion made by us in the aforementioned paragraphs and with the facts and circumstances arising out of record, we deem it proper to direct the CPC, Bangalore (AO) to allow Foreign Tax Credit as claimed by the assessee. Thus, grounds raised by the assessee are allowed for statistical purpose. In the result, the appeal of assessee is allowed for statistical purpose.”
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