The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the foreign tax credit (FTC) cannot be denied to the assessee as per the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and Japan.
The assessee is a private limited company engaged in the business of software publishing consultancy and supply operating system software, business and other application software, computer games etc. It filed its return of income on 29/11/2017 declaring total income of Rs.1,36,89,850/-. During the proceedings, the Assessing Officer noted that the Assessee claimed Foreign Tax Credit (FTC) of Rs.43,46,900/- under section 90 and 91 in respect of tax withheld by Japan.
The two-member bench comprising Shri. Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member has observed that there is no dispute that the Assessee is entitled to claim FTC.
“On perusal of provisions of Rule 128 (8) & (9), it is clear that, one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No.67. This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms.Brinda Kumar Krishna vs.ITO in ITA no.454/Bang/2021 by order dated 17/11/2021,” the Tribunal said.
Based on the above observations, the Tribunal held that “We accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee.”
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