Endel Retail And Customer Care Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)
Foreign Tax Credit cannot be denied merely because Form 67 was filed belatedly; where foreign income has been offered to tax and taxes have been paid abroad, delay in procedural compliance cannot defeat the substantive right to FTC and result in double taxation.
Core Issue: Whether the assessee could be denied Foreign Tax Credit (FTC) of ₹14,32,855 under sections 90/90A merely because Form 67 was allegedly filed after the prescribed time under Rule 128, despite the foreign income having been offered to tax in India and taxes having been paid or withheld in the foreign country.
Facts: The assessee-company, engaged in the business of providing management consultancy services, filed its return for AY 2023-24 declaring total income of ₹1,01,32,670. During the relevant year, it earned income from services provided outside India, including services rendered in Kenya, and foreign taxes of ₹14,32,855 were withheld on income of ₹79,45,000. The assessee claimed FTC under sections 90/90A. However, while processing the return under section 143(1), CPC denied the FTC and raised a demand. The assessee’s rectification application under section 154 was also rejected, resulting in the dispute before the appellate authorities.
AO/CIT(A) Findings: CPC denied the FTC while processing the return and continued the denial even in rectification proceedings under section 154. The CIT(A) upheld the denial on the ground that Form 67 had not been filed within the prescribed time. Although the assessee claimed that Form 67 had been filed on 22.10.2023, the CIT(A), on verification of the e-filing portal, found the filing date as 16.09.2024 and concluded that the statutory requirement under Rule 128 had not been fulfilled. Treating timely filing of Form 67 as a mandatory condition for FTC, the CIT(A) confirmed the denial of ₹14,32,855.
