Harshit Satish Gupta Vs DCIT (ITAT Mumbai)
Case Summary:
The case arose from the denial of Foreign Tax Credit (FTC) amounting to Rs. 2,76,317 claimed by the assessee for taxes paid in Germany for AY 2019-20. The assessee, an individual employed with Tata Consultancy Services Ltd., was deputed to TCS Germany Ltd., where he earned salary income that was subjected to tax in Germany. The foreign salary was duly offered to tax in India as part of his global income, and the assessee claimed FTC under Section 90 of the Income Tax Act, 1961 read with Article 23 of the India-Germany Double Taxation Avoidance Agreement (DTAA).
However, while processing the return under Section 143(1), the Central Processing Centre (CPC) denied the FTC solely because Form No. 67 had been filed after the issuance of the intimation under Section 143(1). The subsequent rectification application under Section 154 was also rejected, and the Commissioner of Income Tax (Appeals) upheld the denial by holding that the delayed filing of Form No. 67 disentitled the assessee from claiming FTC.
Aggrieved by the appellate order, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Mumbai Bench. Advocate Sachin P. Kumar, appearing on behalf of the assessee, argued that there was no dispute regarding the foreign income, payment of taxes in Germany, or inclusion of such income in the Indian return. It was contended that Rule 128 prescribing Form No. 67 is merely procedural in nature and cannot override the substantive right to claim FTC under Section 90 of the Act and the India-Germany DTAA. It was further submitted that a procedural lapse cannot result in denial of treaty benefits when the substantive conditions for claiming FTC stand fulfilled.
