Subramanian Muthukumaran Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal Chennai adjudicated appeals concerning denial of Foreign Tax Credit (FTC) and levy of penalty under the Income-tax Act, 1961 for Assessment Year 2016–17. The assessee, a salaried individual without expertise in taxation, was deputed abroad during FY 2015–16 and initially filed his return on 19.07.2016 declaring only Indian income based on Form 16. Foreign income was not disclosed at that stage.
Subsequently, proceedings were initiated under Section 148, and the assessee, in response, voluntarily disclosed foreign income along with bank statements and supporting documents. He also submitted a revised computation of income and FTC. The Assessing Officer accepted the revised total income but restricted FTC to Rs. 1.03 lakhs based on the original return, ignoring the revised claim of Rs. 3,20,413 supported by documents. The CIT(A) upheld the disallowance on the ground that Form 67 was not filed along with the return.
The Tribunal considered whether delay in filing Form 67 justified denial of FTC. Relying on the judgment of the Madras High Court in Duraiswamy Kumaraswamy vs. Principal Commissioner of Income-tax, which held that filing requirements under Rule 128 are directory and FTC can be allowed if Form 67 is submitted before completion of assessment, the Tribunal allowed the assessee’s claim. It noted that the assessee had filed Form 67 on 13.05.2023, and accordingly directed the AO to grant full FTC.
