Manoj Kumar Srivastava Vs ACIT (ITAT Delhi)
In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Delhi held that the filing of Form 67 is not mandatory for claiming Foreign Tax Credit (FTC). The case, Manoj Kumar Srivastava Vs Assistant Commissioner of Income Tax (ACIT), revolved around the procedural aspects of claiming FTC for taxes paid in the United States on salary income. The Tribunal ruled in favor of the assessee, asserting that procedural violations, such as late filing of Form 67, should not prevent the right to claim FTC.
Case Background
The appeal was filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated August 28, 2023. The main contention was the rejection of the assessee’s FTC claim due to issues with the filing of Form 67.
The assessee, an individual earning salary and interest income, received salary from a U.S.-based company. The company deducted taxes at source under U.S. tax laws, and the assessee claimed FTC for the taxes paid. The original Income Tax Return (ITR) for Assessment Year (A.Y.) 2020-21 was filed on January 10, 2021, without Form 67. Form 67 was subsequently filed on March 31, 2021, and the return was revised the same day. However, the tax department did not allow the FTC claim when processing the revised return under Section 143(1).
Key Grounds of Appeal
- Form 67 Filing Issue: The assessee argued that Form 67 was filed before the end of the assessment year, and procedural issues with the filing should not disqualify him from FTC entitlement. It was further contended that the provisions under Section 90(2) of the Income Tax Act, 1961, allow for the application of more beneficial provisions in Double Taxation Avoidance Agreements (DTAA). As such, the requirement of filing Form 67 should be treated as procedural, not mandatory.
- Revised Return Right: The assessee also cited Section 139(5) of the Income Tax Act, which provides the statutory right to file a revised return. The original return was filed within the prescribed time, and the revised return, which included Form 67, should have been accepted by the department.
- Substantive Right to FTC: The assessee contended that the right to claim FTC should not be denied due to non-compliance with procedural norms, as there is no specific condition in the DTAA for disallowing FTC for such reasons.
Tribunal’s Observations and Ruling
The ITAT Delhi examined the arguments of both parties and relevant case law. The Tribunal noted that Rule 128(9) of the Income Tax Rules provides the procedure for filing Form 67 but does not explicitly mandate that the FTC claim must be denied if Form 67 is filed after the due date or filed incorrectly and rectified later.
