Case Law Details
Ganesh Anandrao Ingulkar Vs ADIT (ITAT Mumbai)
ITAT Mumbai held that foreign tax credit duly available even if form no. 67 is filed along with the revised return as the form is filed before the completion of the assessment.
Facts- Assessee filed its ROI on 05.08.2019 declaring total income of ₹.21,56,790/-. Further, assessee filed revised ROI on 16.06.2020 by declaring the same income as declared in the original return of income. However, assessee claimed relief u/s. 90 of Income-tax Act, 1961 of ₹.1,06,635/- by filing Form 67 along with the revised return of income. The CPC processed the same u/s. 143(1) of the Act and rejected the claim of the assessee and raised the demand of ₹.1,39,200/-. Aggrieved assessee preferred an appeal before the Ld.CIT(A) however the same was dismissed. Being aggrieved, the present appeal is filed.
Conclusion- The Coordinate Bench, in the case of Sonakshi Sinha CIT, has decided the issue in favour of the assesse. Wherein, it was held that the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128(9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income.
Held that assessee has filed the Form-67 along with revised return of income. Therefore, we allow the claim of the assessee. Accordingly, ground raised by the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 20.05.2022 for the A.Y.2019-20.
2. At the outset, we observe that the present appeal is filed by the assessee with a delay of 190 days and assessee also filed an affidavit in this regard and prayed for condonation of delay. In the affidavit assessee has submitted as under: –
“I, Mr. Ganesh Anandrao Ingulkar, having Permanent Account Number [‘PAN’] AAPPI6881C residing at B/502, Shivram Park, Opp. Ashok Kedare Chowk, Tembipada Road, Bhandup West Mumbai, 400078 hereby solemnly affirm and declare as under:-
1. THAT for the Assessment Year 2019-2020, an Order dated 20 May 2022 was passed by the National Faceless Appeal Centre [‘NFAC’], Delhi.
2. THAT the said Order was received by me on 27 May 2022 and hence an appeal ought to have been filed with the Income-tax Appellate Tribunal on or before 26 July 2022.
3. THAT the said Order dated 20 May 2022 was received in my junk mail and hence, I have inadvertently lost sight of the same. It was noticed by me only on 21 December 2022 and pursuant to the discussion with the Consultants, I was advised that an appeal ought to be filed against the Order passed by the, NFAC.
4. THAT due to the aforesaid reason there has been a delay of 191 days in filing the appeal with the Income-tax Appellate Tribunal.
5. THAT the failure to file the appeal on time with the Income-tax Appellate Tribunal was neither deliberate nor contumacious.
I further declare that the above statements are true and correct and to the best of my knowledge and belief.”
3. Ld. DR objected for the condonation of delay and however, he has not filed any submissions against the affidavit and the facts described in the above affidavit.
4. Considered the submissions of both parties, we observe that in the case of M/s. Midas Polymer Compounds Pvt. Ltd., v. ACIT in ITA.No. 288/Coch/2017 the Coordinate Bench of the Tribunal has considered the issue of condonation of delay and by following various judicial precedents along with the decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisiont v. Mst Katiji and ors. (167 ITR 471) condoned the delay of 2819 days observing as under: –
“6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to inadvertent omission on the part of Shri Unnikrishnan Nair N, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression “sufficient cause” should be interpreted to advance substantial justice. Therefore, advancement of substantia l justice is the prime factor while considering the reasons for condoning the delay.
6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counter affidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katij i and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
(2) ‘Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
(3) When substantial justice and technical consideration are pitted against each other, the cause of substantia l justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay.
(4) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(5) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individua l citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned.
6.3 The next question may arise whether 2819 days was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the delay of condonation and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 2819 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM ) condoned more than six hundred days delay. It is pertinent to mention herein that the view taken by the present author in that case was overruled by the Third Member.
6.4. The Madras High Court in the case of Sreenivas Charitable Trust (supra) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause ” should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression “sufficient cause” should receive a liberal construction. In this case, the issue on merit regarding granting of deduction u/s. 80IB was covered in favour of the assessee by the Judgment of the jurisdictional High Court. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression “sufficient cause” should receive a libera l construction. In our opinion, this Judgment of the jurisdictional High Court is also squarely applicable to the facts of this case. A similar view was taken by the Madras High Court in the case of Venkatadr i Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
6.5 The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. The Apex Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by the Apex Court, there is sufficient cause for condonation of delay. The Supreme Court observed that when the delay was of short duration, a liberal view should be taken. “It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. The Apex Court did not say that longer period of delay should not be condoned. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 2819 days
6.6 In case the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal was empowered and capable of removing injustice, in our opinion, the delay of 2819 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merit.
6.7 In view of the above, we condone the delay of 2819 days in filing the appeal and admit the appeal for adjudication.”
5. Respectfully following the above said decision and for the sake of overall justice we condone the delay and admit the appeal for adjudication.
6. On merits, brief facts of the case are assessee filed its return of income on 05.08.2019 declaring total income of ₹.21,56,790/-. Further, assessee filed revised return of income on 16.06.2020 by declaring the same income as declared in the original return of income. However, assessee claimed relief u/s. 90 of Income-tax Act, 1961 (in short “Act”) of ₹.1,06,635/- by filing Form 67 along with the revised return of income. The CPC processed the same u/s. 143(1) of the Act and rejected the claim of the assessee and raised the demand of ₹.1,39,200/-. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions before him. After considering the submissions of the assessee, Ld.CIT(A) dismissed the same with the following observations:-
“3.4 As per Rule 128(9) of the I.T. Rules, 1963, the appellant is required to furnish Form No. 67 well within the due date specified for furnishing the return of income under sub-section(1) of Section 139 of the Act. In the case of the appellant, the appellant has filed his original return of income in ITR-1 without claiming the Foreign Tax Credit relief u/s. 90 of the Act. However, the appellant proceeded to file at revised return of income in ITR-2 on 16.06.2020, which is the extended due date of filing revised return of income for A.Y. 2019-20, claiming the relief u/s. 90 of the Act and also filed Form No. 67 on 16.06.2020.
3.4 Since the appellant has failed to file the return of income for A.Y. 2019-20 as well as Form 67 within the due date of filing of return of income, the AO, CPC has rightly disallowed the claim Foreign Tax Credit. Hence, I agree with the action of the AO in disallowing the claim of Foreign Tax Credit. Therefore, the Grounds No. 1 to 3 raised by the appellant are hereby dismissed. ”
7. Aggrieved assessee preferred appeal before us raising following grounds in its appeal: –
1. Re.: Relief u/s 90 of the Act denied:
1.1 The learned CIT(A) erred in confirming the order of CPC, Bengaluru by denying the relief claimed under section 90 of the Act of INR 1,06,635.
1.2 The learned CIT(A) has erred in not considering the amount of relief claimed as per revised return of income e-filed on 16 June 2020.
1.3 The learned CIT(A) erred in denying the relief on the ground that the Appellant has not filed Form-67 within the due date of filing of return of income prescribed under section 139(1) of the Act without appreciating the fact that the same was furnished alongwith the revised return of income wherein the foreign tax credit was claimed as prescribed under Rule 128 of the Act.
1.4 The learned CIT(A) erred in not appreciating that the Appellant had filed original return of income under section 139(1) of the Act well within the due date and the revised return under section 139(5) of the Act within the due date as applicable for the captioned year.
1.5 The learned CIT(A) erred in not appreciating the fact that the Appellant has filed Form 67 along with a declaration from employer certifying the nature of Income: and amount of tax deducted therefrom which is in accordance with clause (b) of Rule 128(8)() of the Income-tax Rules, 1962.
1.6 Without prejudice to the above, the learned CIT(A) erred in not appreciating that submission of Form 67 is a procedural requirement and based on the substantive provisions of the Act read with the DTAA, the appellant should be eligible to claim relief of tax paid in Netherlands.
1.7 Without further prejudice, the appellant submits that he has complied with the procedural requirement and if there is any defect therein, the appellant should be provided an opportunity to remedy the defect.
2.: Consequential levy of interest u/s 2348 and 234C of the Act:
2.1 The learned CIT(A) erred in confirming the levy of interest u/s 2348 and 234C of the Act without considering the duly filing of return of income by the Appellant.
3. : General
3.1 Each one of the above grounds of appeal is without prejudice to the other.
3.2 The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever the foregoing grounds of appeal at or before the hearing of the appeal.
8. At the time of hearing, Ld. AR submitted that the tax relief claimed by the assessee in revised return of income and the assessee has filed Form 67 while filing the revised return of income. However, he accepted that assessee has not filed the same while filing the original return of income. The plea made by the assessee are rejected by the CPC as well as Ld.CIT(A). In this regard he relied on the decision of the Coordinate Bench in the case of Sonakshi Sinha v. CIT in ITA.No. 1704/Mum/2022 dated 20.09.2022 as per which assessee can file the Form– 67 before completion of the assessment, in this case assessee has submitted the Form – 67 was filed alongwith the revised return of income. Therefore, assessee is well placed by filing the Form-67 alongwith revised return of income before completion of the assessment proceedings.
9. On the other hand, Ld. DR relied on the orders of the lower
10. Considered the rival submissions and material placed on record, we observe that assessee has filed Form–67 by filing revised return of income and not at the time of original return of income. In this regard the Coordinate Bench has considered the similar issue in the case of Sonakshi Sinha CIT (supra) and decided the issue in favour of the assessee, with the following observations: –
“012. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income Tax Rules 1962 provides that the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore – Trib.) wherein following its earlier order in the case of Ms. Brinda Rama Krishna v. ITO [2022] 135 taxmann.com 358 (Bang – Trib) it was held that “one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that 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. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi V CIT(A) NFAC ITA No.680/Bang/2022 06.09.2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for nonadherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further, the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case o f Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128(9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed. ”
11. Respectfully following the above said decision, we note that assessee has filed the Form-67 alongwith revised return of income. Therefore, we allow the claim of the assessee. Accordingly, ground raised by the assessee is allowed.
12. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 05th April, 2023
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