Duraiswamy Kumaraswamy Vs PCIT (Madras High Court)
In the case of Duraiswamy Kumaraswamy vs. PCIT, the petitioner sought to quash an order by the Principal Commissioner of Income Tax (PCIT), which denied his Foreign Tax Credit (FTC) claim for the assessment year 2019-2020. The petitioner, who was employed in Kenya from 2016 to 2018, had filed his Indian income tax return including income from Kenya. However, while filing the return, he inadvertently failed to upload Form-67, which is required to claim FTC under Rule 128 of the Income Tax Rules, 1962. The petitioner later submitted Form-67 on February 2, 2021, before the processing of his return by the Centralized Processing Centre (CPC). Despite this, the FTC claim was not considered, leading to multiple requests and subsequent rejection of his rectification requests by the CPC.
The petitioner approached the Madras High Court, arguing that the procedural requirement under Rule 128 is directory and not mandatory, citing judgments from the Supreme Court supporting the view that delayed submission of forms during the assessment process can still be valid. The court ruled in favor of the petitioner, setting aside the order of the PCIT and directing the respondent to reassess the petitioner’s claim, taking into consideration the FTC filed on February 2, 2021. The court clarified that the rule is procedural and must be applied flexibly when the filing occurred before the final assessment. The PCIT was instructed to complete the reassessment within eight weeks.
