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.
Held that delay in filing the return and Form No.67 (i.e., beyond period under section 139(1) of the Act) is not fatal to the claim of FTC, we hold that CIT(A) is not justified in not granting the benefit of FTC on this count.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of the assessee is directed against order of CIT(A), dated 22.03.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2021-22.
2. Assessee has raised 2 grounds and various sub-grounds. All the grounds relate to the issue of denial of claim of Foreign Tax Credit (FTC) amounting to Rs.9,47,077/-.
3. Brief facts of the case are as follows:
Assesse is a Japanese national. For the relevant Assessment Year, assessee was deputed to India as an employee of M/s. Toyota Kirloskar Auto Parts Pvt. Ltd., Bengaluru. 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 under section 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 under section 90 of the Act to the extent of Rs.9,47,077/- and TDS of Rs.22,65,473/-.
3. The return was processed and intimation under section 143(1) of the Act was issued on 13.10.2022. In the said intimation, the AO did not grant FTC to the extent of Rs.9,47,077/- as claimed in the return of income.
4. Aggrieved, assessee filed appeal before the First Appellate Authority (FAA). 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. Secondly, it was also mentioned in the impugned order of the CIT(A) that FTC is available in respect of only income taxable in India and received outside India for the amount of taxes paid outside India. The CIT(A) was of the view that in the instant case, the income was earned and received in India only and not outside India and therefore the claim of the FTC has been rightly denied by the CPC under section 143(1) of the Act.
5. Aggrieved by the order of the CIT(A), assessee has filed the present appeal before the Tribunal. The learned AR submitted that the issue in question is squarely covered by the following orders of the Tribunal :
