Baburao Atluri Vs DCIT (ITAT Hyderabad)
Income Tax Appellate Tribunal (ITAT) Hyderabad adjudicated the case of Baburao Atluri vs. DCIT, addressing the denial of Foreign Tax Credit (FTC) due to a delay in filing Form 67. The assessee, engaged in exports and technical services, had declared an income of ₹4.27 crore for Assessment Years (AY) 2018-19 and 2019-20. While the Assessing Officer (AO) accepted the declared income, the FTC claim of ₹1.29 crore under Section 90/90A of the Income Tax Act was disallowed due to late submission of Form 67. The National Faceless Appeal Centre (NFAC) upheld the AO’s decision, citing the procedural requirement under Rule 128(9).
The assessee argued that the delay of 14 days in filing Form 67 resulted from late receipt of tax deduction certificates from a Zambian entity. Citing judicial precedents, including the Bangalore ITAT ruling in 42 Hertz Software India Pvt. Ltd., the assessee contended that filing Form 67 was a directory requirement rather than mandatory. The NFAC, however, maintained that procedural compliance was essential and that appellate authorities lacked the power to condone delays in FTC claims.
The ITAT Hyderabad analyzed previous rulings, emphasizing that the Double Taxation Avoidance Agreement (DTAA) takes precedence over domestic tax laws. It referred to the Supreme Court ruling in CIT vs. Vegetable Products Ltd. (1972), which established that, in case of conflicting interpretations, the one favorable to the taxpayer should be adopted. Additionally, the Tribunal distinguished the present case from Muralikrishna Vaddi vs. ACIT, where a two-year delay was deemed unreasonable. The ITAT found that a 14-day delay was justified due to external factors and ruled in favor of the assessee.
