Asha Rani Pandya Vs DCIT/ACIT (ITAT Indore)
In the significant case of Asha Rani Pandya Vs DCIT/ACIT, the Income Tax Appellate Tribunal (ITAT) Indore provided crucial clarity on the requirement of filing Form 67 for claiming Foreign Tax Credit (FTC). The ruling stated that while filing Form 67 is necessary, it is a directory requirement and not mandatory. This decision has pivotal implications for taxpayers dealing with foreign income and tax credits.
The case revolves around Asha Rani Pandya, who appealed against the order of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Chennai for the Assessment Year (A.Y.) 2019-20. The primary grounds of appeal were centered on the disallowance of FTC due to the delayed filing of Form 67.
Asha Rani Pandya, a senior citizen residing in India but a citizen of the USA, filed her income tax return on 29th July 2020. She claimed credit for taxes paid in the USA amounting to ₹20,18,809 under Section 90 of the Income Tax Act. However, the Centralized Processing Center (CPC) disallowed this claim as Form 67 was not filed within the due date specified under Section 139(1) of the Act.
The assessee contended that the filing of Form 67, though necessary, should not be deemed mandatory. Citing procedural errors, she explained that the form was initially submitted with the return but had to be revised due to mistakes and was eventually filed on 28th May 2021. The assessee argued that such procedural delays should not invalidate the claim for FTC, emphasizing that Form 67 is a directory requirement. Key judgments supporting this contention were referenced:
1. Deepak Shimoga Padmaraju vs. ADIT: The tribunal in this case ruled that Rule 128 does not mandate the filing of Form 67 for claiming FTC.
2. Duraiswamy Kumaraswamy vs. PCIT: The Hon’ble Madras High Court held that the filing of Form 67 is directory and procedural, not mandatory.
3. Brinda Ramakrishna vs. ITO: The tribunal reiterated that non-furnishing Form 67 before the due date under Section 139(1) is not fatal to the claim for FTC.
The revenue authorities argued that according to Rule 128 of the Income Tax Rules, Form 67 must be filed before the due date under Section 139(1). They stressed that the word “shall” in Rule 128 indicates a mandatory requirement, thus justifying the disallowance of FTC due to the late submission of Form 67.
