Case Law Details
Preeti Das Vs ITO (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT) Pune ruled in favor of Preeti Das, allowing her Foreign Tax Credit (FTC) claim despite the late filing of Form 67. Das, an Indian resident employed with Microsoft Global Services, had worked in the U.S. on an international assignment and later filed a revised tax return for AY 2019-20, claiming FTC of ₹7,34,421 under Section 90(2) of the Income Tax Act. However, the Centralized Processing Center (CPC) in Bangalore denied the FTC claim, citing the late submission of Form 67. Both the rectification petition under Section 154 and the subsequent appeal before the National Faceless Appeal Centre (NFAC) were rejected, reinforcing the view that Form 67 must be filed before the due date under Section 139(1).
Upon appeal, ITAT Pune examined prior case rulings and determined that the requirement to file Form 67 before the tax return deadline is only directory, not mandatory. The tribunal cited precedents from the Madras High Court and its own earlier rulings, noting that similar claims had been allowed despite delayed Form 67 submissions. Since the form was available when CPC processed the return, ITAT ruled that FTC should not be denied solely on timing grounds. The tribunal directed the jurisdictional assessing officer to allow the tax credit after verification, setting a precedent for similar cases.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee pertaining to the Assessment Year 2019-20 is directed against the order dated 27.09.2024 passed by the National Faceless Appeal Centre, Delhi [in short ‘NFAC’) which inturn is arising out of the Rectification order dated 18.07.2022.
2. Briefly, the facts of the case are that the appellant is an individual (Resident) deriving income under the head “salary”. During the year under consideration, the appellant worked with Microsoft Global Services Center (India) Private Limited. On an international assignment, she went to United States of America for the period 01.01.2017 to 05.07.2018. The appellant filed the revised Return u/s.139(5) for the A.Y.2019-20 on 31.03.2020 declaring total income of Rs.65,25,060/- after claiming credit for Foreign Tax paid of Rs.7,34,421/- u/s.90(2) of the Act read with the Article 25(2)(a) of the India-USA Treaty . However, the Form No.67 was filed by the appellant on 23.03.2020. The CPC, Bangalore, vide Intimation dated 18.02.2021 denied the Foreign Tax Credit claimed by the assessee at Rs.7,34.421/-, as Form No.67 was not filed within prescribed time. Against the said intimation, the assessee filed the rectification petition u/s.154 of the Act which came to be rejected.
3. Being aggrieved by the above Rectification order, an appeal was filed before the NFAC, who vide impugned order had confirmed the action of the CPC, Bangalore denying the claim of credit for Foreign Tax paid, as the Form No.67 was not filed before the time limit specified u/s.139(1) of the Act and filing of Form No.67 is mandatory to claim the benefit of Foreign Tax Credit.
4. Now the appellant is in appeal before the Tribunal challenging the order passed by ld. NFAC affirming the action of the CPC.
5. The ld. Counsel for the assessee referring to various decisions of the Coordinate Benches submitted that the filing of Form No.67 is a directory requirement but not mandatory. Therefore, claim of Foreign Tax Credit has to be allowed in favour of the assessee by virtue of the catena of decisions rendered by this Tribunal on this very issue.
6. On the other hand, ld. Departmental Representative submits that CPC, Bangalore was justified in denying the credit for Foreign Tax paid, as the assessee had not filed Form No.67 as per amended provisions of the Income Tax Rules.
7. We have heard both the parties and perused the material on record. The issue in the present appeal is that whether or not the CPC, Bangalore is justified in denying the credit for Foreign Tax paid for the reason that the Form No.67 was not filed within the due date for filing of the return of income as specified under the provisions of section 139(1) of the Income Tax Act, 1961 (‘the Act’). Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 23.03.2020. The CPC, Bangalore had processed the return of income as on 18.02.2021, which means that Form No.67 was very much available with the CPC, Bangalore. Therefore, the CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income under the provisions of section 139(1) of the Act, as it is merely directory in nature. Our view is fortified by the judgment of Hon’ble Madras High Court in the case of Duraiswamy Kumaraswamy Vs. The PCIT and others in W.P.No.5834/2022 dated 06.10.2023 wherein it has been held that filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. We further find support from the decision of this Tribunal in the case of Samiran Arunkumar Dutta Vs. DCIT – ITA No.1195/PUN/2024 dated 14.08.2024 where also assessee was employed with same employer but Foreign Tax Credit was allowed even when Form No.67 was filed belatedly observing as follows :
“7. I heard the ld. Sr. DR and perused the material on record. The issue in the present appeal is that whether or not the CPC, Bangalore is justified in denying the credit for Foreign Tax paid for the reason that the Form No.67 was not filed within the due date for filing of the return of income as specified under the provisions of section 139(1) of the Income Tax Act, 1961 (‘the Act’). Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 30.03.2021. The CPC, Bangalore had processed the return of income as on 24.12.2021, which means that Form No.67 was very much available with the CPC, Bangalore. Therefore, the CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income under the provisions of section 139(1) of the Act, as it is merely a directory. Therefore, I direct the CPC, Bangalore to amend the Intimation u/s 143(1) of the Act by taking into consideration the Form No.67 filed by the appellant. Accordingly, the grounds of appeal filed by the assessee stands partly allowed.”
8. In light of above, we direct the Jurisdictional Assessing Officer to allow the alleged Tax Credit by taking into consideration the Form No.67 filed by the appellant but after due verification. Accordingly, the grounds of appeal raised by the assessee stands allowed.
9. In the result, the appeal of the assessee is allowed.
Order pronounced on this 21st day of January, 2025.
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