Case Law Details
Vikash Daga Vs ACIT (ITAT Delhi)
Introduction: The ITAT Delhi ruling in the Vikash Daga vs ACIT case shines a light on the balance between procedural norms and substantive rights within the realm of taxation. The case addressed the denial of foreign tax credit due to the late submission of form 67, raising questions on whether procedural lapses can negate the substantive right to claim a foreign tax credit under Section 90 of the Income Tax Act.
Analysis: In this case, the appellant, Vikash Daga, filed a return of income that included earnings made in the USA. He sought to claim a foreign tax credit of Rs. 18,87,114 under Section 90 of the Income Tax Act. However, the claim was denied as form 67, necessary to claim the foreign tax credit, was submitted after the due date of filing the income return. This denial was upheld by the CIT(A), after which the case reached ITAT Delhi.
Upon review, ITAT Delhi determined that while filing form 67 is a procedural requirement, it is not mandatory. This ruling implies that a violation of procedural norms does not nullify the substantive right to claim foreign tax credit. Therefore, ITAT directed the AO to allow the foreign tax credit, emphasizing that procedural requirements should not overshadow substantive rights, and that the Double Taxation Avoidance Agreement (DTAA) overrides both the Act and the Rules.
Conclusion: The Vikash Daga vs ACIT case offers a critical perspective on the intersection of procedural requirements and substantive rights under the Income Tax Act. It underscores the significance of the right to claim foreign tax credit under Section 90, notwithstanding procedural delays. This landmark ruling can serve as a valuable precedent for similar cases, reinforcing that procedural norms should not supersede the fundamental right of a taxpayer to claim legitimate credits.
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