BGA Electrical & Services Private Limited Vs DCIT (ITAT Kolkata)
Conclusion: Despite late filing of Form 67, assessee deserved the credit for taxes paid in Nepal since the provisions of DTAA (in this case DTAA with Nepal) had an overriding effect over other provisions of the Act.
Held: Assessee-company had filed an income tax return for Assessment Year 2021-22, claiming a Foreign Tax Credit (FTC) of Rs. 75,000 under Section 90. The FTC claim was based on taxes paid in Nepal on foreign business income of Rs. 5,00,000 earned from Annapurna Impex and BG Associates J.V. Assessee filed Form 67 which was required for claiming FTC beyond the deadline prescribed under Rule 128 of the Income Tax Rules. CPC denied the FTC claim due to late filing of Form 67. Assessee appealed this denial before CIT(A), citing DTAA provisions and procedural lapses. CIT(A) upheld denying the FTC claim, agreeing with the CPC that timely filing of Form 67 was mandatory under Rule 128. Aggrieved, the assessee filed an appeal before Tribunal challenging the denial of FTC. Assessee contended that the provisions of the India-Nepal DTAA overriding domestic tax rules and procedural delays should not invalidate FTC claims. Further, CPC failed to provide prior intimation as mandated under Section 143(1) before adjusting the tax claim and in the case of Anindya Sarkar v. ADIT, CPC, Bengaluru, ITAT allowed FTC despite late filing of Form 67. It was held that assessee deserved the credit for taxes paid in Nepal since the provisions of DTAA (in this case DTAA with Nepal) had an overriding effect over other provisions of the Act. Tribunal concluded that procedural delays should not hinder substantive claims like FTC when the claim was genuine and supported by tax payments in the foreign jurisdiction.
