Suresh Kumar Doodi Vs ACIT (ITAT Jaipur)
The Income Tax Appellate Tribunal (ITAT) in Jaipur recently delivered a crucial verdict in the case of Suresh Kumar Doodi vs. ACIT. The judgment reiterates that the delay in filing Form 67 does not result in disallowance of the Foreign Tax Credit (FTC) under Rule 128(9) of the Income Tax Rules. This article provides an in-depth analysis of the judgment and its implications.
Background of the Case: Suresh Kumar Doodi, a salaried individual, had his Foreign Tax Credit claim of Rs. 15,53,686 disallowed by the National Faceless Appeal Centre (NFAC) and the Assessing Officer (AO). The primary issue was the delay in filing Form 67 after the due date, which was perceived as a violation of Rule 128(9).
The Assessee’s Argument: The assessee argued that the delay in filing Form 67 was a mere procedural lapse and should not result in the disallowance of the Foreign Tax Credit. The claim was further supported by various judgments cited by the assessee’s Authorized Representative (AR).
Views of the Assessing Officer and NFAC: Both the Assessing Officer and NFAC contended that the timely filing of Form 67 is a mandatory condition under Rule 128 for claiming the FTC. Hence, the delay should result in the disallowance of the claim.
ITAT’s Judgement: After considering the arguments from both sides and previous judicial precedents, ITAT concluded that the requirement to file Form 67 before the due date is not mandatory but directory in nature. It further clarified that Rule 128(9) does not specifically state the disallowance of the FTC in case of delay in filing Form No. 67.
Implications of the Judgment: The ruling sets a precedent that could relieve many taxpayers who miss the procedural deadline for filing Form 67. It emphasizes that a mere delay in procedural formalities should not result in the loss of substantive rights like claiming an FTC.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 27/01/2023 [here in after (NFAC)] for assessment year 2018-19 which in turn arise from the order dated 08.02.2021 passed under section 154 of the Income Tax Act, by the ACIT/DCIT, Circle-06, Jaipur.
2. The assessee has marched this appeal on the following grounds:-
“1. That NFAC erred on facts and in law in upholding rectification order dated 08.02.2021 passed by the assessing officer under section 154 of the Act (pursuant to intimation dated 08.06.2020 and rectification order dated 07.08.2020 passed by Central Processing Centre) disallowing foreign tax credit of Rs. 15,53,686 claimed by the Appellant in the return of income.
2. That NFAC/CIT(A) erred on facts and in law in not appreciating that the tax liability in relation to salary income earned in United States of America (USA) during secondment period was discharged in USA and such income is not taxable in India in terms of provisions of section 90 of the Act read with Article 25 of India-US Double Taxation Avoidance Agreement (‘DTAA’ or ‘Treaty’).
3. That NFAC/CIT(A) erred on facts and in law in not appreciating that taxing salary income received in USA would result in double taxation of income which is contrary to the provisions of the Act as also the treaty.
4. That NFAC/CIT(A)erred on facts and in law in not appreciating that filing of Form 67 under Rule 128 of the Income Tax Rules, 1962 before due date specified under section 139(1) of the Act is a mere procedural requirement in comparison to substantive right of being entitled to obtain credit for tax paid in a treaty Country on same income.
5. That NFAC/CIT(A) erred on fact and in law in not appreciating that Rule 128 which merely prescribes the procedure for claiming credit of taxes cannot enlarge burden on the Appellant nor can it abridge the benefit conferred under the Act and the Treaty.
6. The NFAC/CIT(A) erred in law in levying interest under section 234A, 234B, 234C of the Act.”
3. The fact as culled out from the records is that in this case, The assessee, Suresh Kumar Doodi, a salaried individual, e-filed his return of income for the AY 2018-19 on January 22, 2019 by declaring Rs,. 1,69,36,787/- as gross total income and paid the self-assessment tax of INR 24,70,738/- after reducing the eligible tax credit. The same total income of Rs. 1,67,44,980 was declared after a deduction of Rs. 1,91,803/- under Chapter VI-A of the Act from the above gross total income and a self-assessment tax of Rs. 24,70,738/- was paid by the assessee after claiming the eligible tax credits. The CPC processed return of income u/s 143(1) on 08.06.2020 determining demand of Rs. 21,23,250/- and later on determining demand of Rs. 22,00,795/- on 07.08.2020 under section 154 of the IT Act, 1961. In that order of the ld. AO u/s. 154 of the Act he hold that the assessee was required to file return of income as well as form 67 before due date specified for furnishing the return of income under sub-section (1) of section 139. The assessee filed form 67 on 28.01.2019 and return of income on 22.01.2019 under section 139(4) which is applicable in case of filing of return of income after due date. Therefore, the assessee is not eligible for relief u/s 90/90A of the Income Tax Act, 1961 and thereby the claim of the assessee was denied.
4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:
“4 I have considered the grounds of appeal and seen the submission made by the appellant and perused the rectification order dated 08.02.2021 passed u/s 154 of the Income Tax Act, 1961. The grounds of appeal wise discussion and decisions are as follows:-
4.1 Ground No. 1 and 2 are related to disallowance of foreign tax credit claimed u/s 90 of the IT Act. The Appellant claimed the tax relief of Rs. 15,53,686/- being paid in the foreign country in his Return of Income. During the processing of the return, the claimed tax relief of Rs. 15,53,686/- was disallowed. Subsequently, the Appellant filed petition u/s 154 to the AO for allowing the relief of Rs. 15,53,686/-. The AO passed the rectification order u/s 154 of the IT Act on 08.02.2021. The relevant part of the rectification order is reproduced as below:-
Order u/s 154 of the IT Act
“The application of the assessee has been carefully considered. After going through the details available on ITBA as well as details provided by assessee, comments on contention of the assessee are as under:-
On the issue of Relief u/s 90/90A: In respect of relief of foreign tax credit u/s 90/90A/91 relevant portion of notification no.9 dated 19.09.2017 issued by CBDT is mentioned here-in-below:
“an assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him….as specified in rule 128 of the Income tax (18th amendment) rules, 2016. As per sub rule 9 of rule 128, the statement in form no. 67 reffered 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 due date specified for furnishing the return of income under sub-section (1) of section 139……. submission of form 67 shall precede filling of return of income.”
In view of the aforementioned details, the assessee was required to file return of income as well as form 67 before due date specified for furnishing the return of income under sub-section (1) of section 139. The assessee filed form 67 on 28.01.2019 and return of income on 22.01.2019 under section 139(4) which is applicable in case of filing of return of income after due date. Therefore, the assessee is not eligible for relief u/s 90/90A of the Income Tax Act, 1961″
The due date of filing of Return of Income for AY. 2018-19 in the case of Appellant was 31.03.2018, however, the Appellant filed the Return of Income on 22.01.2019 which is after the due date specified for furnishing the Return of Income under sub-section (1) of section 139. Further, the Appellant submitted Form 67 as referred in Rule 128 was only on 28.01.2019 which is also after the due date specified for furnishing the Return of Income under sub-section (1) of section 139. In view of these facts and the provisions of IT Act and Rule 128 of the IT Rules, 2016 and notification No.9 dated 19.09.2017 of CBDT, I don’t find any irregularities in the order of 154 passed by the AO. Further, the Appellant could not submit any contrary view or evidence against the order of 154 of the IT Act. Accordingly, I am of the considered view that the foreign tax credit of Rs. 15,53,686/- is not allowable in the case of Appellant as the relevant Return of Income and Form 67 as referred in Rule 128 of the IT Rules, 2016 have been furnished after the due date specified for furnishing the Return of Income under sub-section (1) of section 139 of the IT Act. Therefore, the order of 154 of the IT Act is hereby confirmed and this ground of appeal is dismissed.
4.2 Ground No. 3 relates to charging of interest under sections 234A, 234B & 234C of the IT Act. The charging of interest is consequential which doesn’t require specific adjudication and hence this ground of appeal is dismissed.
4.3. Ground No. 4 is general in nature and requires no specific adjudication.
5. In result, the appeal is dismissed”
5. In this appeal the ld. AR of the assessee submitted a detailed case law paper book and the same is extracted here in below :
