Delay in filing return and Form No. 67 is not fatal to claim Foreign Tax Credit

Kazuya Watanabe Vs Assistant Director of Income Tax (ITAT Bangalore)

ITAT Bangalore held that delay in filing the return and Form No.67, beyond period under section 139(1) of the Act, is not fatal to the claim of FTC. Foreign Tax Credit duly available in respect of income taxable in India and received outside India for the amount of taxes paid outside India.

Facts- Assesse is a Japanese national. Since assessee was a resident and ordinary resident during the year, he had filed the return of income offering global income which claimed to include salary income earned in India as well as salary income earned outside India along with dividend income earned outside India. The assessee had claimed taxes paid outside India as FTC u/s. 90 of the Act. For the Assessment Year 2021-22, the return of income was filed on 10.01.2022 declaring total income of Rs.99,85,580/-. The tax liability on the said income declared in the return was Rs.32,12,551/- and the same was sought to be discharged by credit of FTC u/s. 90 of the Act to the extent of Rs.9,47,077/- and TDS of Rs.22,65,473/-.

AO did not grant FTC to the extent of Rs.9,47,077/- as claimed in the return of income. The CIT(A) confirmed the view taken by the AO primarily for the reason that the assessee has not filed the return of income within the time prescribed under section 139(1) of the Act.

Conclusion-The Bangalore Bench of the Tribunal in the case of Sanjiv Gopal Vs. ACIT considered various orders of the Tribunal and decided the issue in favour of the assessee. The Bangalore Bench of the Tribunal held that Rule 128 is only a procedural provision and not a mandatory provision and cannot override the provisions of the Act or the DTAA.

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