Akshay Rangroji Umale Vs DCIT (ITAT Pune)
ITAT Pune addressed the appeal in the case of Akshay Rangroji Umale Vs DCIT concerning the denial of Foreign Tax Credit (FTC) due to delayed filing of Form 67. The appellant, a resident Indian, reported global income, including salary earned in the USA, which was subject to tax both in India and the USA. To claim relief under the Indo-USA Double Tax Avoidance Agreement (DTAA), the appellant filed Form 67 belatedly after the due date specified under Section 139(1) of the Income Tax Act, 1961. This delay led the CPC to reject the FTC claim, a decision upheld by the CIT(A).
The appellant argued that the procedural requirement of filing Form 67 was directory and not mandatory. The counsel emphasized that the DTAA provisions do not mandate such filing and that Form 67, filed within the extended timeline under Section 139(4), did not prejudice the Revenue. The Department, however, contended that Rule 128(9) mandates the filing of Form 67 by the due date under Section 139(1), making compliance obligatory for claiming FTC. The Department cited a prior ITAT decision to support its argument for strict adherence to procedural rules.
The ITAT Pune examined the enabling provisions of the Income Tax Act and DTAA. It observed that Rule 128, introduced to operationalize Section 90, is intended to facilitate relief and prevent double taxation. The tribunal acknowledged that Rule 128(9), prescribing a time limit for filing Form 67, is procedural. Referring to the CBDT’s subsequent amendment allowing FTC claims under Section 139(4) timelines, the ITAT underscored that the procedural rules should not override substantive rights under the DTAA.
In its ruling, the ITAT Pune concluded that the provisions of Rule 128(9) are directory, not mandatory, aligning with judicial precedents emphasizing the supremacy of DTAA provisions in cases of conflict. It emphasized that the belated filing caused no loss to the Revenue and allowed the appellant’s FTC claim.
The case was represented by CA Kishor Phadke (Assisted by CA Saurabh Jadhav)
