Debanjan Chatterjee Vs Deputy Director of Income Tax (ITAT Kolkata)
ITAT Kolkata Ruling on Foreign Tax Credit: Debanjan Chatterjee vs. Deputy Director of Income Tax: The Income Tax Appellate Tribunal (ITAT) Kolkata ruled in favor of Debanjan Chatterjee, setting aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and directing the Assessing Officer (AO) to grant Foreign Tax Credit (FTC) under Section 90 of the Income Tax Act. Chatterjee, a non-resident working in the United Kingdom, filed his income tax return belatedly on February 19, 2022, for Assessment Year (AY) 2021-22. The Centralized Processing Center (CPC) in Bengaluru denied his FTC claim of ₹37,79,568, citing the delay in filing Form 67. The rectification application filed under Section 154 was also rejected. The CIT(A) upheld this decision, stating that the FTC claim was inadmissible due to non-compliance with Rule 128 of the Income Tax Rules. However, ITAT Kolkata noted that Form 67 was submitted along with the return, and the provisions of the Double Taxation Avoidance Agreement (DTAA) override domestic tax laws when beneficial to the taxpayer.
The tribunal relied on prior rulings, including Anindya Sarkar vs. ACIT CPC Bengaluru and Mahua Bagchi vs. ACIT, which established that a delay in filing Form 67 should not lead to the denial of FTC if the taxpayer has paid foreign taxes. ITAT Kolkata observed that Rule 128 does not explicitly prohibit FTC claims due to delayed filing and that FTC is a vested right. Based on these precedents, the tribunal concluded that there was no justification for disallowing Chatterjee’s FTC claim. Consequently, ITAT Kolkata directed the AO to allow the credit in accordance with the DTAA. This ruling reinforces that procedural delays should not obstruct a taxpayer’s rightful claim to tax relief under international agreements.
