Timirbaran Mazumder Vs DCIT (ITAT Kolkata)
ITAT Kolkata order on denial of Foreign Tax Credit (FTC) claimed under Section 90/90A of the Income Tax Act, 1961, due to the delayed filing of Form 67
Question:
whether the filing of Form 67 within the due date prescribed under Section 139(1) is a mandatory requirement or merely directory for the purpose of claiming FTC under the Double Taxation Avoidance Agreement (DTAA).
Brief Facts:
- The assessee, a resident individual, filed his return of income for AY 2018-19 on 29.03.2019 under Section 139(4), showing total income of Rs. 75,54,930.
- He claimed FTC of Rs. 14,35,797, representing tax paid in the USA under the India-USA DTAA.
- Form 67, which is required for FTC claims, was also filed on 29.03.2019, along with the belated return.
- The CPC processed the return under Section 143(1)(a) and disallowed the FTC, raising a demand of Rs. 20,48,260.
- The assessee’s rectification application was rejected.
- On appeal, the CIT(A) held that filing Form 67 within the due date u/s 139(1) was a mandatory requirement under Rule 128(9) of the Income Tax Rules, 1962. Since the assessee filed the return after the due date, the FTC was denied
ITAT Kolkata Decision:
The Tribunal overturned the CIT(A)’s decision and held in favour of the assessee, concluding that:
1. Rule 128(9), which prescribes the due date for filing Form 67, is procedural and directory, not mandatory.
2. The DTAA provisions override the provisions of the Income Tax Act and the Rules, as they are more beneficial to the assessee.
3. The assessee’s vested right to claim FTC cannot be denied solely due to a procedural lapse, especially when Form 67 was filed before processing under Section 143(1)(a).
Legal Principles & Judicial Precedents Discussed:
