Vishal Negi Vs DCIT (ITAT Hyderabad)
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, has ruled in favor of the assessee, Vishal Negi, allowing a Foreign Tax Credit (FTC) claim of Rs.49.65 lakh for the Assessment Year (A.Y.) 2022-23. The dispute arose after the Assessing Officer (AO) and subsequently the Commissioner of Income Tax (Appeals) [CIT(A)] denied the credit, citing the assessee’s failure to file Form 67 by the due date for filing the income tax return under Section 139(1) of the Income Tax Act, 1961.
The assessee, an individual, had filed his return of income on July 30, 2022, declaring a total income of Rs.89,74,680 and claiming the aforementioned FTC. However, the intimation under Section 143(1) of the Act, issued on October 26, 2022, raised a demand of Rs.31,07,910, disallowing the FTC. The CIT(A) upheld this disallowance, emphasizing that filing Form 67 within the Section 139(1) due date was mandatory and that since the assessee filed it on December 15, 2022, after the AO’s order, the credit was rightly denied.
Before the ITAT, the assessee’s counsel argued that the CIT(A) erred by not considering a crucial amendment to Rule 128(9) of the Income Tax Rules, 1962. This rule was substituted by a new rule via a CBDT notification dated August 18, 2022, effective from A.Y. 2022-23. As per the amended Rule 128(9), the statement in Form 67 can be furnished “on or before the end of the A.Y relevant to the previous year in which the income…has been offered to tax or assessed to tax in India,” provided the return of income was furnished by the due date under Section 139(1) or (4). In this case, the assessee had filed the return by the Section 139(1) due date (July 30, 2022). Since the A.Y. 2022-23 ends on March 31, 2023, the filing of Form 67 on December 15, 2022, was well within the new extended deadline.
