Hemant Ramchandra Pawar Vs DCIT (ITAT Pune)
Pune ITAT: Foreign Tax Credit Cannot Be Denied Merely for Delay in Filing Form 67
The Pune ITAT held that Foreign Tax Credit (FTC) is a substantive right available under the Act and the applicable DTAA, and therefore cannot be denied merely because Form 67 was filed belatedly. The Tribunal directed the Assessing Officer to verify the claim and grant the eligible FTC.
The assessee, an employee of Tech Mahindra, was deputed to Denmark during AY 2019-20 and earned salary income there. The foreign salary was duly offered to tax in India and the assessee claimed Foreign Tax Credit of ₹2.25 lakh in respect of taxes paid in Denmark. However, although the FTC claim was disclosed in the return itself, Form 67 was filed 603 days late, resulting in denial of the credit by CPC and creation of a tax demand.
The Tribunal noted that the assessee had disclosed the foreign income and foreign taxes paid in the return of income itself through the relevant schedules. Thus, the Department was already in possession of all material facts relating to the FTC claim. The credit was denied solely because Form 67 was not filed within the prescribed time limit under Rule 128.
Relying on several decisions including Akshay Rangroji Umale, Uttamkumar Tukaram Patil, Vinodkumar Lakshmipathi, Deepak Shimoga Padmaraju, and Dheeraj Tolaram Talreja, the Tribunal reiterated that filing of Form 67 is directory and procedural in nature, and not a mandatory condition for claiming FTC. It emphasized that procedural requirements cannot defeat a substantive relief granted under the Act and the applicable DTAA.
The ITAT further observed that Rule 128 does not provide for denial of FTC merely because Form 67 is filed belatedly. Once the foreign income has been offered to tax in India and the foreign taxes paid are verifiable, the credit cannot be refused on a technical ground. The Tribunal also noted that treaty benefits under the DTAA cannot be curtailed by procedural rules.
Accordingly, the Tribunal held that filing Form 67 during the pendency of assessment proceedings constitutes sufficient compliance, directed the Assessing Officer to verify the foreign tax payment details and grant the eligible Foreign Tax Credit of ₹2.25 lakh in accordance with law. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
