Suchi Agrawal Vs ITO (ITAT Delhi)
The case in question involves an appeal by Suchi Agrawal against an order dated December 30, 2023, issued by the Commissioner of Income Tax (Appeal) [CIT(A)] in Madurai for the Assessment Year 2020-21. The primary issue revolves around the denial of a Foreign Tax Credit (FTC) amounting to INR 10,29,861, which was rejected by the Assessing Officer (AO) because Form 67, which is required for claiming FTC, was not submitted within the stipulated deadline.
Grounds of Appeal
Suchi Agrawal raised two main grounds in her appeal:
- The CIT(A) erred in confirming the AO’s action of denying the FTC solely due to the delayed submission of Form 67.
- The CIT(A) did not consider relevant ITAT decisions which clarify that the submission of Form 67 is procedural rather than mandatory.
Case Facts
- Income Tax Return Filing: Agrawal filed her income tax return on January 10, 2021, declaring an income of INR 28,97,770, with no tax liability due to the FTC claimed under sections 90/91 of the Income Tax Act, 1961.
- AO’s Action: The AO disallowed the FTC due to the late filing of Form 67, resulting in an additional tax liability of INR 8,02,380.
- Subsequent Actions: Despite filing Form 67 on January 21, 2022, and submitting a rectification application, the AO reiterated the tax liability in orders issued on August 8, 2022, and September 17, 2022.
- CIT(A) Decision: The CIT(A) upheld the AO’s decision, emphasizing the procedural requirement of submitting Form 67 on time.
Appellant’s Arguments
The appellant, represented by her Authorized Representative (AR), argued that:
- The requirement to submit Form 67 is procedural and not mandatory.
- Procedural violations should not negate the substantive right to claim FTC.
- The appellant referenced multiple ITAT decisions which support the view that the late submission of Form 67 should not result in the denial of FTC.
Department’s Arguments
The Departmental Representative (DR) supported the lower authorities’ findings, maintaining that the delayed submission justified the denial of FTC.
ITAT Delhi’s Analysis and Decision
The ITAT Delhi considered the following points:
- Nature of Form 67 Submission: The tribunal noted that Form 67’s submission is a procedural requirement, which should not invalidate the substantive right to claim FTC.
- Precedent Cases: The tribunal referenced several precedents where ITAT had ruled that procedural delays should not override substantive tax rights. Key cases cited included:
- Isha Mago vs. ADIT: ITAT held that procedural lapses do not justify disallowing FTC.
- Rameshwar Prasad Shrivastava vs. ITO: ITAT ruled that DTAA provisions override procedural requirements, and FTC claims should not be denied for procedural non-compliance.
- Vikash Daga vs. ACIT: ITAT determined that the procedural nature of Form 67 submission should not affect FTC claims.
- Ajay Kumar Mishra vs. DCIT: Similar conclusions were drawn about the non-mandatory nature of Form 67 submission.
- DTAA Provisions: The tribunal emphasized that Double Taxation Avoidance Agreements (DTAA) take precedence over procedural norms outlined in the Income Tax Act, provided they benefit the taxpayer.
Conclusion
Based on the analysis and binding precedents, ITAT Delhi concluded that:
- The submission of Form 67 is procedural and not mandatory.
- Procedural delays should not negate the taxpayer’s substantive right to claim FTC.
- The orders of the lower authorities were set aside.
- The AO was directed to accept Form 67 and verify the FTC claim according to the law.
Outcome
The appeal filed by Suchi Agrawal was allowed for statistical purposes, and the AO was instructed to reassess the FTC claim while accepting the belated Form 67 submission.
