The Income Tax Appellate Tribunal (ITAT) of Delhi adjudicated on three appeals filed by Eastman Industries Ltd. for the assessment years 2018-19, 2019-20, and 2020-21. These appeals challenged separate orders issued by the National Faceless Assessment Centre (NFAC) on 25th October 2022. The appeals addressed two primary grievances: disallowance due to the late deposit of employees’ provident fund contributions and the denial of foreign tax credit (FTC) for late submission of Form 67. Additionally, in one of the appeals, the denial of TDS credit due to an incorrect TAN entry was also contested.
Common Grievances
i. Late Deposit of Employees’ Provident Fund Contributions:
- The first common grievance involved the disallowance of expenses due to the late deposit of employees’ contributions to the provident fund. Although the amounts varied across the assessment years, the underlying issue remained consistent.
- The ITAT noted that this issue was addressed by the Supreme Court in Checkmate Services Private Limited 448 ITR 518. The appellant’s counsel argued that the delay should be calculated from the date of salary payment, not the due date under the Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) Acts.
- To ensure justice and fairness, the ITAT remanded the issue to the Assessing Officer (AO) to reconsider the delay calculation based on the salary payment dates and resolve the matter in accordance with the law.
ii. Denial of Foreign Tax Credit (FTC):
- The second grievance involved the denial of FTC claims due to the late submission of Form 67. Rule 128 of the Income Tax Rules requires the submission of Form 67 before filing the return to claim FTC.
- The ITAT highlighted that while the assessee failed to file Form 67 on time, Rule 128(9) does not specify disallowance of FTC for delays in submitting the form. Therefore, this requirement was considered procedural rather than mandatory.
- The ITAT remanded this issue to the AO, instructing them to accept Form 67 and decide on the FTC claim based on the merits of the case and the provisions of the law.
Specific Grievance in ITA No. 2990/Del/2022
In addition to the common grievances, the assessee in ITA No. 2990/Del/2022 also contested the denial of TDS credit due to an incorrect TAN entry in the return of income.
