The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that mere delay in filing Form No. 67 as per Rule 128(9) of the Income Tax Rules, as applicable for the year under consideration, does not disentitle a taxpayer from claiming foreign tax credit in respect of tax paid outside India, particularly where Form No. 67 and related documents were filed before the Assessing Officer during rectification proceedings and the denial was made only on a technical ground.
Accordingly, the Tribunal directed the jurisdictional Assessing Officer to decide the assessee’s claim for foreign tax credit on merits after accepting Form No. 67 and the related documents filed by the assessee.
The Division Bench comprising Sandeep Singh Karhail (Judicial Member) and Bijayananda Pruseth (Accountant Member) noted that the assessee had filed the return and had claimed credit of foreign tax paid under Section 90 in that return. It further noted that the CPC, Bengaluru denied the foreign tax credit while processing the return under Section 143(1), after which the assessee filed Form No. 67 and a rectification application under Section 154 seeking the foreign tax credit.
The Tribunal observed that the impugned order proceeded on the basis that Form No. 67 had not been filed at all by the assessee in terms of Rule 128(9). However, on examining the record, the Tribunal found that the assessee had placed on record Form No. 67 in respect of taxes of Rs. 5.36 lakhs paid outside India.
Further, the Tribunal observed that the assessee had admitted that Form No. 67 was not submitted before the due date for filing the return of income, but had specifically submitted that it was filed before the Assessing Officer during rectification proceedings. The Tribunal also noted that a copy of Form No. 67 as submitted before the Assessing Officer had been furnished before the CIT(A). Despite these materials, the CIT(A) still held that Form No. 67 had not been filed at all.
The Tribunal also took note of the substitution of Rule 128(9) by the Income-tax (Twenty-seventh Amendment) Rules, 2022 with effect from April 01, 2022. Under the amended rule, the time period for furnishing Form No. 67 was extended till the end of the relevant assessment year, provided the return had been furnished within the time specified under Section 139(1) or Section 139(4). The Tribunal expressly observed that, with effect from April 01, 2022, the time for furnishing Form No. 67 stood extended accordingly.
Neither Section 90 nor Section 91 prescribes any timeline for filing such declaration on or before the due date of filing the return, and that Rule 128(4) specifically provides conditions where foreign tax credit would not be allowed, whereas Rule 128(9) does not stipulate denial of credit for delayed filing, added the Tribunal.
Having considered the same, the Tribunal concluded that mere delay in filing Form No. 67 under Rule 128(9), as it stood during the relevant year, would not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India.
Briefly, the appellant/ assessee is a film artist earning income from professional activities. For the relevant year, he filed his return declaring total income of Rs. 80.48 lakhs. Out of the total professional receipts, Rs. 26.84 lakhs was received from parties outside India, on which tax of Rs. 5.36 lakhs was paid outside India. While filing the return, the assessee included both Indian and foreign income and claimed relief of Rs. 5.36 lakhs under Section 90 of the Income Tax Act, in respect of tax paid outside India.
The AO however, denied the foreign tax credit claimed under Section 90. Thereafter, the assessee filed a rectification application under Section 154 along with proof of tax paid and Form No. 67, which was disposed of, rejecting the claim for foreign tax credit on the basis that Form No. 67 had not been filed. Hence, the solitary grievance of the appellant was the denial of foreign tax credit under Section 90 of the Act due to delay in filing Form No. 67.
Appearances:
Advocate Neelam Jadhav, for the Appellant/ Taxpayer
Senior Advocate Anurag Tripathi, for the Respondent/ Revenue
