Endel Retail And Customer Care Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)
Foreign Tax Credit cannot be denied merely because Form 67 was filed belatedly; where foreign income has been offered to tax and taxes have been paid abroad, delay in procedural compliance cannot defeat the substantive right to FTC and result in double taxation.
Core Issue: Whether the assessee could be denied Foreign Tax Credit (FTC) of ₹14,32,855 under sections 90/90A merely because Form 67 was allegedly filed after the prescribed time under Rule 128, despite the foreign income having been offered to tax in India and taxes having been paid or withheld in the foreign country.
Facts: The assessee-company, engaged in the business of providing management consultancy services, filed its return for AY 2023-24 declaring total income of ₹1,01,32,670. During the relevant year, it earned income from services provided outside India, including services rendered in Kenya, and foreign taxes of ₹14,32,855 were withheld on income of ₹79,45,000. The assessee claimed FTC under sections 90/90A. However, while processing the return under section 143(1), CPC denied the FTC and raised a demand. The assessee’s rectification application under section 154 was also rejected, resulting in the dispute before the appellate authorities.
AO/CIT(A) Findings: CPC denied the FTC while processing the return and continued the denial even in rectification proceedings under section 154. The CIT(A) upheld the denial on the ground that Form 67 had not been filed within the prescribed time. Although the assessee claimed that Form 67 had been filed on 22.10.2023, the CIT(A), on verification of the e-filing portal, found the filing date as 16.09.2024 and concluded that the statutory requirement under Rule 128 had not been fulfilled. Treating timely filing of Form 67 as a mandatory condition for FTC, the CIT(A) confirmed the denial of ₹14,32,855.
ITAT Finding: The Tribunal noted that both parties fairly agreed that the controversy was directly covered by the Ahmedabad Bench decision in Narendra Vishnubhai Mistry v. ITO. The Tribunal found that there was no change in either the factual matrix or the applicable legal proposition warranting a different view. Following the earlier decision, the Tribunal held that where the fact of payment of taxes in India and abroad is undisputed, mere delay in filing Form 67 cannot prejudice the substantive right of the assessee to claim Foreign Tax Credit. Procedural delay cannot result in denial of relief intended to prevent double taxation.
Cases Relied Upon: The Tribunal principally followed Narendra Vishnubhai Mistry v. ITO, ITA No. 1473/Ahd/2024, order dated 19.11.2024, reported as 2024 (11) TMI 1101 – ITAT Ahmedabad. In that case, the Tribunal held that where foreign taxes had actually been paid and the foreign income was subject to taxation, delay in filing Form 67 could not defeat the assessee’s entitlement to FTC. The Revenue was directed to grant the credit and carry out the necessary rectification.
Outcome: Following the binding coordinate Bench decision on identical facts and legal principles, the ITAT Ahmedabad allowed the assessee’s appeal and held that the denial of Foreign Tax Credit of ₹14,32,855 could not be sustained merely on account of delayed filing of Form 67. The Revenue was consequently required to grant the eligible FTC and provide consequential relief.
Ratio: The requirement of timely filing of Form 67 is procedural in nature and cannot override the substantive entitlement to Foreign Tax Credit under sections 90/90A. Where the foreign income has been offered to tax in India and taxes have actually been paid or withheld abroad, delay in filing Form 67 cannot result in denial of FTC and consequent double taxation. Substance must prevail over procedural technicalities.
Cases Discussed
- Narendra Vishnubhai Mistry Vs. ITO (ITAT Ahmedabad), AY 2021-22, ITA No.1473/Ahd/2024, order dated 19.11.2024.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT AHMEDABAD
The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) (in short “Ld. CIT(A)”), ADDL/JCIT(A)-2, Hyderabad vide order dated 28.02.2026 relevant to Assessment Year 2023-24.
2. The assessee has raised the following grounds of appeal:
1 The Ld. CTT(A) erred in law and on facts in confirming denial of Foreign Tax Credit of Rs. 14,32,855/- claimed under Section 90/90A, resulting in unjust double taxation.
2 The Ld. CIT(A) failed to appreciate that filing of Form 67 within the due date prescribed under Rule 128(9) is procedural and directory in nature, and not a condition precedent for claiming FTC
3 The Ld. CIT(A) failed to appreciate that: foreign income has been offered to tax in India, taxes have been paid abroad, and documentary evidences are on record. Thus, denial of FTC merely on procedural lapse defeats the principle of substance over form.
4 The impugned order defeats the object of Section 90 and applicable DTAA, which is to avoid double taxation, thereby leading to unintended tax burden on the Appellant.
5 The Appellant craves leave to add, amend, alter, vary or withdraw any ground(s) of appeal at or before the time of hearing
6 The learned CIT (A) has erred in law and on facts of the case in confirming action of the ld. AO in charging interest u/s. 234B and 234C of the Act
3. The brief facts of the case are that assessee is a company engaged in the business of providing management consultancy. the return of income was filed declaring total income of Rs.1,01,32,670/-. the assessee provides services to clients outside India, constituting export of services. During the relevant financial year, the assessee achieved a turnover of Rs.2,39,93,130/- out of which customers deducted/withheld taxes amounting to Rs.14,32,855/- on services valued at Rs.79,45,000/- provided Kenya. The assessee filed Form 67 on October 22,2023, within the due date prescribed under Income Tax Rules 128(9), claiming a rebate or the withholding tax. However, while processing the return, the Deputy Director of Income Tax, CPC (Centralized Processing Centre), issued an intimation order under Section 143(1), wherein relief under section 90/90A amounting to Rs.14,32,855/- was not granted. Subsequently, the assessee filed a rectification request against the intimation order under section 143(1). The CPC, Income Tax Department, Bengaluru, issued a rectification order under Section 154 but again failed to grant relief under section 90/90A.
4. Aggrieved by the assessee order, assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal of the assessee by observing as follows:
5.1 In this Appeal, the Appellant filed Return of Income for the A.Y. 2023-24 on 27.11.2023 declaring income of Rs. 1,01,32,670/-. Subsequently, the Return was processed CPC with a demand of Rs. 15,69,010/- and did not allow Foreign Tax Credit u/s 90 of the Act. Consequently, the Appellant filed Rectification to CPC, and the CPC processed the rectification u/s 154 of the Act and still did not allow the Foreign Tax Credit u/s 90 of the Act and sustained the order u/s 143(1) of the Act. This is the sole issue of the Appeal. Aggrieved with the same, the Appellant has filed the instant Appeal. The Extract of orders u/s 143(1) and u/s 154 of the Act which are as below:
5.2 The written submissions filed have been perused and considered carefully. Further, the Appellant company has stated that in the relevant year, it had earned Income of Rs. 79,45,000/- from outside India and taxes paid on this Income of Rs. 14,32,855/- has been claimed in the Return of Income. The Appellant has stated that it filed relevant Form 67 under Rule 128 of the Income Tax Rules, 1962 also on 22.10.2023 i.e. within due date of the Return of Income which is 30.11.2023. The extract of form 67 as furnished by the Appellant is as below:
5.3. However on verification from the e filing portal it is found that the Form 67 was filed only on 16.09.2024 i.e not within the prescribed time limit. Therefore, the claim of the Appellant that it has been filed on 22.10.2023 is incorrect. The relevant extract from e filing portal is as below:
5.4. A mandatory condition for availing Foreign Tax Credit is the filing of a Form 67 before the due date of filing of Return of Income u/s 139(1) of the Act. Therefore in the instant case, the same has not been filed within the due date for filing of Return of Income u/s 139(1) of the Act. Therefore the denial of the same by CPC is found to be correct and thus the Grounds field by the Appellant are dismissed.
5.5. In view of the above, the Appeal is dismissed.
5. Heard the argument of both the parties and perused the material available on record.
6. At the outset, both the parties fairly submitted that the issue raised by the assessee in the present appeal stands covered by the order of the Tribunal in the case of Narendra Vishnubhai Mistry Vs. ITO for A.Y 2021-22 in ITA Nos.1473/Ahd/2024 dated 19.11.2024. For the sake of ready reference, the operative portion of said order is reproduced as under:
3. The facts of the case are that the Assessee during the year under consideration has filed his return of income on 29.12.2021 declaring total income of Rs. 50,62,800/-. The Assessee received an intimation under section 143(1) of the Act dated 22.03.2022 wherein the credit for Foreign Tax Credit (FTC) was not allowed and demand of Rs.12,50,630/- has been raised. The Assessee has thereafter filed application u/s 154 of the Act for rectification of the mistake regarding non-allowance of Foreign Tax Credit (FTC); however, the Assessing Officer rejected the application filed by the assessee vide rectification order u/s 154 of the Act on 12.09.2023 owing to the delay of filing Form No. 67.
4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Id. CIT(A) who also dismissed the appeal of the assessee on the ground that the assessee has not followed Rule 128 in respect of filing of Form No. 67 on or before the due date of filing the return of income for the relevant assessment year.
5. Aggrieved, the assessee is now in appeal before the Tribunal.
6. It is an undisputable fact that the assessee has paid taxes in India as well as abroad and the tax paid in the foreign country are eligible to be credited towards the total tax payments. Since the factum is not in dispute, delay in filing cannot prejudice the right of the assessee to claim Foreign Tax Credit (FTC). Keeping in view the specificities of the instant case, the Revenue is hereby directed to accord Foreign Tax Credit (FTC) to the assessee and carry out rectification.
7. In the absence of any change in factual matrix and legal proposition brought to our notice, the appeal of the assessee is hereby allowed.
8. In the result, appeal of the assessee is allowed.
The order is pronounced in the open Court on 24.08.2026.
