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Income Tax

Delay Condoned for FTC Claim: Pursuing Rectification is Valid Cause

Case Law Details

TaxGuru Citation
2026 taxguru.in 3835
Case Name
Xerago E-Biz Services Pvt. Ltd. Vs ITO (ITAT Chennai)
Date of Judgement/Order
Only available for paid members
Related Assessment Year
2021-22
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Xerago E-Biz Services Pvt. Ltd. Vs ITO (ITAT Chennai)

In this case, the assessee’s appeal was dismissed by the CIT(A) as time-barred with a delay of 615 days. The issue involved denial of Foreign Tax Credit (FTC) of ₹26.17 lakh.

Before the ITAT, the assessee demonstrated a detailed chronology showing that:

  • Immediately after intimation u/s 143(1), it filed rectification applications.
  • It continuously pursued the remedy u/s 154 before CPC and AO.
  • The final rejection of rectification and confirmation of demand became known only upon receipt of demand notices in October 2024, after which appeal was promptly filed.

The Tribunal held:

  • The delay was not deliberate or due to negligence, but because the assessee was bonafide pursuing an alternative remedy.
  • When an assessee is actively pursuing rectification, it constitutes a reasonable cause for delay.
  • Moreover, the assessee had a prima facie strong case on merits (claiming FTC and filing Form 67 before intimation).

Accordingly, the ITAT:

  • Condoned the delay of 615 days,
  • Set aside the CIT(A)’s order, and
  • Restored the matter to CIT(A) for adjudication on merits.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal filed by the assessee is directed against the Addl./JCIT(A), Varanasi order dated 31.10.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2021-22.

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Author Info

CA Vijayakumar Shetty
Qualification: CA in Practice
Company: Shetty & Co, Chartered Accountants, Mangalore
Location: Mangalore, Karnataka
Articles Published: 6,941

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