Violation of procedural norm does not extinguish substantive right of claiming Foreign Tax credit

Sri. Sandeep Patwari Vs DCIT (ITAT Bangalore)

Violation of procedural norm does not extinguish substantive right of claiming Foreign Tax credit (FTC)

Assessee received 143(1) intimation wherein the foreign tax credit (FTC) of Rs.14,02,442 was not granted. Rectification application filed u/s 154 too did not allow the claim of the assessee. CIT(A) confirmed the 154 order holding that the assessee has not filed Form No.67 before the prescribed time limit. CIT(A) concluded that Form No.67 filed belatedly is non est in law and the provisions of Rule 128 of the I.T. Rules are mandatory in nature.

Before the Tribunal assesee has submitted that he has offered foreign income to tax in India and had paid taxes on the same in India and denial of credit for foreign tax paid overseas is incorrect.

Tribunal allowed the appeal noting that violation of the procedural norm does not extinguish the substantive right of claiming the credit of FTC as held in Ms. Brinda Ramakrishna v. ITO in ITA No.454/Bang/2021 (order dated 17.11.2021) wherein it was held that- (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act.

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