Case Law Details
Narendra Vishnubhai Mistry Vs ITO (ITAT Ahmedabad)
In the case of Narendra Vishnubhai Mistry vs. ITO, the Ahmedabad ITAT addressed whether procedural delays in filing Form 67 could bar a taxpayer from claiming Foreign Tax Credit (FTC). The assessee filed a return of income for AY 2021-22 and claimed FTC for taxes paid abroad. However, the claim was denied during processing under Section 143(1) of the Income Tax Act due to the late submission of Form 67, as required by Rule 128. The Assessing Officer rejected a rectification request citing procedural delays, and the CIT(A) upheld this decision.
The ITAT emphasized that procedural lapses should not override substantive rights when the taxpayer has complied with the substantive provisions of paying taxes in both jurisdictions. The tribunal noted that the taxes paid abroad and the eligibility for FTC were undisputed, making the delay in filing Form 67 inconsequential to the claim’s validity. Consequently, the ITAT directed the Revenue to grant the FTC and rectify the earlier assessment. This ruling reinforces the principle that procedural delays should not lead to unjust denial of statutory entitlements.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the office of the Commissioner of Income-tax (Appeals), ADDL/JCIT(A)-7, Mumbai (hereinafter referred to as “CIT(A)” for short), dated 14.06.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for Assessment Year (AY) 2021-22.
2. The Assessee has taken following grounds of appeal:-
“1. The Learned CIT (Appeals) erred in holding that no express powers have been vested of any authority to condone the delay in filing of Form 67.
2. The Learned CIT (Appeals) erred in holding that the appellant was not entitled to claim relief of Rs. 10,28,529 since he had failed to file form 67 read with Rule 128.
3. The Learned CIT (Appeals) erred in disregarding the submission made during the course of appellate proceedings and further erred in holding that as per Rule 128 prevailed u/s 90 of the Act.
4. The Learned CIT (Appeals) erred in confirming the denial of the foreign tax credit amounting to Rs. 10,28,519/-.
5. Your appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.”
3. The facts of the case are that the Assessee during the year under consideration has filed his return of income on 29.12.2021 declaring total income of Rs. 50,62,800/-. The Assessee received an intimation under section 143(1) of the Act dated 22.03.2022 wherein the credit for Foreign Tax Credit (FTC) was not allowed and demand of Rs.12,50,630/- has been raised. The Assessee has thereafter filed application u/s 154 of the Act for rectification of the mistake regarding non-allowance of Foreign Tax Credit (FTC); however, the Assessing Officer rejected the application filed by the assessee vide rectification order u/s 154 of the Act on 12.09.2023 owing to the delay of filing Form No. 67.
4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who also dismissed the appeal of the assessee on the ground that the assessee has not followed Rule 128 in respect of filing Form No. 67 on or before the due date of filing the return of income for the relevant assessment year.
5. Aggrieved, the assessee is now in appeal before the Tribunal.
6. It is an undisputable fact that the assessee has paid taxes in India as well as abroad and the tax paid in the foreign country are eligible to be credited towards the total tax payments. Since the factum is not in dispute, delay in filing cannot prejudice the right of the assessee to claim Foreign Tax Credit (FTC). Keeping in view the specificities of the instant case, the Revenue is hereby directed to accord Foreign Tax Credit (FTC) to the assessee and carry out rectification.
7. In the result, appeal of the assessee is allowed.
The order is pronounced in the open Court on 22.11.2024
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