Relief under Section 90 and Form 67 in Indian Income Tax: A Guide and Consideration for Belated Filing
Introduction
The Indian income tax system provides provisions for individuals and entities to claim relief under Section 90 of the Income Tax Act when they have paid taxes in a foreign country. To facilitate this process, Form 67 is used to apply for relief under Section 90. In this article, we will explore the concept of relief under Section 90, the purpose of Form 67, and whether it can be filed belatedly.
Understanding Relief under Section 90
Section 90 of the Income Tax Act, 1961, is a crucial provision that enables taxpayers to claim relief from double taxation. Double taxation can occur when the same income is taxed in both India and another foreign country. To avoid this, Section 90 allows Indian residents to claim relief for taxes paid in a foreign country with which India has entered into a Double Taxation Avoidance Agreement (DTAA).
The DTAA is an agreement between two countries to prevent double taxation and provide clarity on the taxing rights of each country. India has entered into DTAA agreements with various countries, and these agreements outline the specific rules for claiming relief under Section 90.
Purpose of Form 67
Form 67, officially known as “Form of application for obtaining relief under Section 90 and/or Section 90A or Section 91 of the Income-tax Act, 1961,” is used to apply for relief under Section 90. The form is used by Indian residents who have paid taxes in a foreign country and want to claim relief from double taxation as per the provisions of the relevant DTAA.
Key Information Required on Form 67 includes:
1. Personal Information: Name, address, and Permanent Account Number (PAN).
2. Details of the Foreign Country: Name of the foreign country with which India has a DTAA, and the nature of income for which relief is sought.
3. Tax Information: Details of the foreign tax paid, the amount, and any tax identification numbers.
4. Relevant Sections: Declaration of the sections under which relief is sought, i.e., Section 90, Section 90A, or Section 91.
Can Form 67 be Filed Belatedly?
The Income Tax Act does not explicitly provide for the belated filing of Form 67. However, if we see ITAT judgments we can infer that Rule 128 of the Income Tax Rules which requires the assessee to submit Form 67 before filing the income tax return for claiming Foreign Tax Credit (FTC) is directory in nature and not mandatory, thus Foreign Tax Credit (FTC) cannot be denied for delay in filing Form 67.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) in the case of ITA No.412/Ahd/2023 Assessment Year: 2020-21: Manoj Kaushikprasad Jingar Vs. The Assessing Officer, CPC Bangalore/The Income Tax Officer, Ward-5(3)(1), Ahmedabad has held that the Foreign Tax Credit could not be denied on mere late filing of form No.67 as per India-Tanzania Double Taxation Avoidance Agreement (DTAA).
The assessee also filed the required Form No.67 but the said Form was filed belatedly. The return was processed by CPC and the assessee received intimation under Section 143(1) of the Income Tax Act from CPC wherein the CPC did not give the relief under Section 90 of the Income Tax Act as claimed by the assessee and raised demand.
The assessee filed a rectification application under Section 154 of the Income Tax Act to the CPC. The CPC issued rectification order without making any changes in the original
intimation under Section 143(1) of the Income Tax Act and again raised the demand in the rectification order under Section 154 of the Income Tax Act and confirmed the original demand.
A Single Bench of Suchitra Kamble, (Judicial Member) allowed the appeal filed by the assessee holding that the late filing of Form No.67 could not deny the entitlement of the assessee the benefit of the treaty when the salary earned was from Tanzania and their is DTAA between India and Tanzania.
Also, The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) in the case of ITA. No. 164/JP/2023 Assessment Year: 2018-19: Suresh Kumar Doodi Vs. Assistant Commissioner of Income Tax, Circle-06, Jaipur has held that the delay in filling Form 67 doesn’t result in disallowance of the Foreign Tax Credit (FTS) under Rule 128(9) of the Income Tax Rules, 1962.
The Two-member bench comprising of S. Seethalakshmi (Judicial member) and Rathod Kamlesh Jayantbhai (Accountant member) held that the assessee is eligible for foreign tax credit. The claim of foreign tax credit cannot be denied and the Assessing Officer was directed to allow the FTC based upon the belated form No. 67 filed by the assessee. Thus, the appeal of the assessee was allowed.
The ITAT, Bangalore bench, consisting of members Beena Pillai (Judicial Member) and Chandra Poojari (Accountant Member) has ruled in the case of ITA No. 29/Bang/2021 – Assessment Year: 2017-18: M/s. 42 Hertz Software India Pvt. Ltd. Vs. The Assistant Commissioner of Income Tax, Circle – 3 (1)(1), Bangalore that Rule 128 of the Income Tax Rules which requires the assessee to submit Form 67 before filing the income tax return for claiming Foreign Tax Credit (FTC) is a directory in nature and not mandatory, thus Foreign Tax Credit (FTC) cannot be denied for the delay in filing Form 67.
The bench observed that the Assessee is entitled to claim FTC. “On perusal of provisions of Rule 128 (8) & (9), it is clear that one of the requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by the assessee before the filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is a directory in nature.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) recently in the case of I.T.A. No. 782/Kol/2022 – Assessment Year: 2020-21: Sobhan Lal Gangopadhyay Vs. Asstt. Director of Income Tax, CPC, Bengaluru held that the relief under Section 90 of the Income Tax Act, 1961 should not be denied solely on the ground of a delay in filing Form 67.
Conclusion
In summary, while the belated filing of Form 67 for claiming relief under Section 90 is not explicitly provided for in the Income Tax Act, but according to the judgments of ITAT it’s a proven fact that the filing of Form No. 67 is directory in nature and not mandatory. Taxpayers are encouraged to file Form 67 in a timely manner to avoid double taxation and to ensure the smooth processing of their relief claims. It is also advisable to consult with tax professionals or the Income Tax Department for guidance on Form 67 and its filing procedures, including any considerations for belated filing.
Author: CA Brijmohan Lavaniya
Co-Author: Siddharth Sachan
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