Case Law Details
Lakshmi Sundararajan Vs DCIT (ITAT Chennai)
In Lakshmi Sundararajan v. DCIT, Chennai ITAT has ruled in favour of Assessee by allowing Foreign Tax Credit (FTC) despite a delay in filing Form 67.
Assessee had claimed FTC of ₹3,82,049 u/s 90/91, but AO denied it as Form 67 was filed on 21.09.2018-after the due date u/ 139(1) (31.08.2018). CIT(A) upheld the disallowance solely on the ground of late filing. Assessee’s appeal to ITAT was filed with a delay of 463 days, supported by an affidavit explaining the reasons. Tribunal found sufficient cause & condoned the delay.
On merits, ITAT noted that neither Sections 90/91 nor Rule 128(9) prescribe that delayed filing of Form 67 results in automatic denial of FTC. It followed its earlier rulings (Mrs. Venkatraman Lakshmi, Shri Prakash Varadarajulu) & the Mumbai ITAT decision in Sonakshi Sinha, holding that the requirement to file Form 67 before the due date is directory in nature. The Bench also observed that the amendment effective 01.04.2022 permits filing up to the end of the assessment year, indicating legislative intent against rigid timelines.
Since Form 67 had been filed before completion of the assessment, ITAT held that Assessee was entitled to FTC & directed the AO to grant the same.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), ADDL/JCIT (A)-4 Kolkata [‘CIT(A)’ in short] dated 28-11-2023 in the matter of intimation order u/s 143(1) passed on 18.03.2020 denying Foreign Tax Credit of Rs.3,82,049/- as claimed by the assessee u/s 90/91 of the Act. The same was denied for delay in filing of requisite Form 67 along with return of income.
2. At the outset, it is noted that the appeal has been filed after delay of ‘463’ days and the assessee has filed an affidavit explaining the delay. Having gone through the contents of the affidavit, we are satisfied that there is sufficient cause for the delay. Therefore, we condone the delay of ‘463’ days and proceed to adjudicate the grounds of appeal raised by the assessee.
3. The assessee has filed Form 67 beyond due date 31.08.2018 prescribed u/s 139(1). Form 67 was filed by the assessee on 21.09.2018 after due date and lay claim on the credit. AO denied the claim of Foreign Tax Credit for the reason that the assessee company has failed to submit the Form 67 within the due date prescribed u/s 139(1) of the Act. However, Ld. counsel relied on the decision of the Hon’ble Madras High Court’s judgment in the case of Duraiswamy Kumaraswamy Vs. PCIT-8 Chennai (W.P.No.5834 of 2022 and W.M.P.Nos.5925 and W.M.P. Nos.5925 and 5927 of 2022) has deleted the addition made by the AO.
4. Per contra, the ld.DR relied upon the impugned order of the ld.CIT(A).
5. We find that this issue has been addressed by the Co-ordinate Bench in the case of Venkatraman Lakshmi vs. ITO (ITA No.704/Chny/2023 dated 31.08.2023) as under: –
‘’3. We find that this issue has been adjudicated by us in assessee’s favor in the decision of Shri Prakash Varadarajulu vs. DCIT (ITA No.990/Chny/2022 dated 16-02-2023) as under: –
4. We find that filing of Form 67 has been held to be directory and not mandatory in many decisions of the Tribunal. The Mumbai Tribunal, in its recent decision, titled as Sonakshi Sinha vs. CIT (142 Taxmann.com414), held as under: –
12. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question in this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income-tax Rules, 1962 provides that the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under subsection (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd. (Supra) wherein following its earlier order in the case of Ms. Brinda Rama Krishna (supra) it was held that “one of the requirements of rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi v. CIT(A) [IT Appeal No. 680/Bang/2022, 6-9-2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further, the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed.
In the absence of any contrary decision on record and respectfully following the consistent view of Tribunal on this issue, we direct lower authorities to grant the foreign tax credit as claimed by the assessee.
5. The appeal stand allowed”.
4. Taking consistent view in the matter, we direct lower authorities to allow foreign tax credit as claimed by the assessee.
5. In the result, The appeal stand allowed”.
5. Respectfully following the Co-ordinate bench order, we set aside the impugned order of the ld.CIT(A). We direct lower authorities to allow foreign tax credit as claimed by the assessee. Hence, we allow the appeal of the assessee.
6. In the result, the appeal of the assessee stands allowed.
Order pronounced in the open court on 07th August, 2025 at Chennai.
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