Varun Vijaykumar Chhabria Vs ITO (ITAT Bangalore)
Foreign Tax Credit Cannot Be Denied for Late Form 67 – Bang ITAT Allows Substantive Relief
The Bangalore ITAT held that Foreign Tax Credit (FTC) cannot be denied merely due to delay in filing Form 67, and allowed credit of ₹2.91 lakh under Section 90 read with India–USA DTAA.
The assessee, an individual deputed to the USA, had:
- Earned salary abroad,
- Paid taxes in the USA, and
- Subsequently disclosed the same in India through a revised return along with Form 67.
The CPC and CIT(A) denied FTC on the ground that:
- Form 67 was not filed within the due date u/s 139(1),
- Hence, Rule 128(9) conditions were not satisfied.
However, the Tribunal held:
- The assessee had furnished complete evidence of foreign tax payment, including US tax returns.
- Double taxation relief under DTAA is a substantive right, which cannot be denied on procedural lapses.
- Filing of Form 67 is directory and procedural, not mandatory.
The ITAT emphasized:
- Law aims to avoid double taxation, and denying FTC would defeat this objective.
- Procedural requirements cannot override substantive entitlement.
- Reliance was placed on coordinate bench rulings (e.g., Brinda Ramkrishna).
Accordingly, the Tribunal directed the AO to grant FTC of ₹2.91 lakh in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
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