Sanjeev Sivasankaran Menon Vs DCIT (ITAT Bangalore)
ITAT Bangalore Allows Foreign Tax Credit Despite Delay in Form 67 – Non-filing Along with Return is Only a Technical Lapse
Assessee had paid tax in a foreign country & claimed Foreign Tax Credit (FTC) in his return for AY 2021-22. However, he failed to file Form 67 along with the return, & therefore CPC disallowed the claim in the intimation u/s 143(1). Later, Assessee filed Form 67 on 02.08.2022, & sought rectification, but CPC rejected it.
CIT(A) also confirmed the disallowance on the ground that Form 67 was filed belatedly & the authorities had no power to condone delay.
Before the ITAT, Assessee argued that FTC is a treaty right under DTAA, & once tax is paid abroad & Form 67 is eventually filed, the benefit cannot be denied merely because Form 67 was not filed along with the return. He relied on the decision of Brinda Ramakrishna (ITAT Bangalore) & other similar rulings which held that Form 67 filing is directory, not mandatory.
Tribunal observed that:
- Assessee did pay tax in the foreign country.
- Form 67 was in fact filed, though after filing the return.
- DTAA overrides the Act, & income taxed abroad cannot be taxed again in India.
- Non-filing of Form 67 along with return is at best a technical violation.
- Several coordinate bench decisions have already held that delay in filing Form 67 can be condoned, & benefit must be granted.
ITAT also rejected the CIT(A)’s view that authorities have no power to condone delay, stating that such a view is incorrect in law. However, since the AO had not verified Form 67 & supporting documents, Tribunal remanded the matter back to the AO only for verification of the Form 67. If the Form is correct, FTC must be granted.
