ANAND MAHABAL SHETTY,MUMBAI V. ASSISTANT DIRECTOR OF INCOME TAX, CPC. , BANGALORE

ITA 593/MUM/2025

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The case involves Anand Mahabal Shetty, the appellant, who appealed against the order of the Commissioner of Income Tax (Appeals), Gwalior, which denied him a foreign tax credit of INR 35,77,264 for the assessment year 2019-20. This credit was claimed under the India-China Double Taxation Avoidance Agreement (DTAA) and Section 90 of the Income Tax Act, 1961, for taxes paid in China on income also taxed in India. The primary contention was the late filing of Form No. 67, required under Rule 128 of the Income Tax Rules, 1962, which was filed along with the return instead of before the stipulated deadline. The Tribunal found that the requirement to file Form No. 67 before the return was directory, not mandatory, and thus, the delay should be condoned.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32235 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: M/s 42 Hertz Software India Pvt Ltd. Vs the Assistant Commissioner of Income Tax, Circle 3 (1)(1), Bangalore, Ms. Brindu Kumar Krishna vs. ITO
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Keywords: Procedural lapse
• Section: 90; 234B; 119(2)(b)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “A” Bench, Mumbai. Before Shri Om Prakash Kant (AM) & Smt. Kavitha Rajagopal (JM) ITA No. 593/MUM/2025 (Assessment Year : 2019-20) Anand Mahabal Shetty C/402, Chavandai CHS Opposite Rajpark, Parsik Nagar, Kalwa, Thane Mumbai-400 060. Vs. ADIT, CPC, Bangalore/ACIT Qureshi Mansion Gokhale Road Thane-400 602. PAN : AOPPS4358Q Appellant Respondent Assessee by : None Revenue by : Shri Ram Krishn Kedia Date of Hearing : 12/02/2025 Date of pronouncement : 18/03/2025 O R D E R Per Om Prakash Kant (AM) :- This appeal has been preferred by the assessee against the order dated 21.11.2014 passed by the learned Commissioner of Income Tax (Appeals), Gwalior [in short CIT(A)] for assessment year 2019-20 in relation to foreign tax credit amounting to Rs. 35,77,264/- denied by the Assessing Officer, Central Processing Centre (CPC) in terms of section 90 of the Income Tax Act, 1961 (in short Act). 2. Grounds raised by the appellant are reproduced as under :- “Denial of foreign tax credit 1. erred in confirming the action of AO in denying the foreign tax credit claimed of INR 35,77,264 in the tax return under article 23(2) of the India- China double taxation avoidance agreement ('DTAA') read with section 90 of the Act; 2. erred in confirming the denial of foreign tax credit on the ground that form 67 was not filed on or before the due date of filing of return of income u/s 139(1) of the Act and the Appellant did not comply with Rule 128 (9) of the Income-tax Rules, 1962; Interest u/s 234B of the Act; Anand Mahabal Shetty 2 3. erred in levying additional interest of Rs. 8,87,860 /- under section 234B of the Act; Interest u/s 234C of the Act; 4. erred in levying additional interest of Rs. 1,80,657/- under section 234C of the Act; without appreciation interest u/s 234C can be levied only on the return income; The Appellant submits that each of the above grounds of appeal is without prejudice to the other. The Appellant craves leave to add, alter, omit or substitute any or all of the above grounds of appeal, at any time before or at the time of the appeal.” 3. Briefly stated the facts are that the appellant filed its return of income on 29.8.2019 claiming foreign tax credit of Rs. 35,77,264/- under section 90/91 of the Act in respect of taxes paid in China on the salary received of Rs. 1,12,95,414/- which has also been subjected to tax in India. The appellant filed relevant Form No. 67 prescribed under rule 128 of the Income Tax Rules, 1962 (in short the Rules) along with return of income filed on 29.8.2019. Whereas, under Rule 128(9) of the Rules the assessee was required to file such Form prior to one month before the due date of filing of the return of income. In this case the due date of filing of return of income was 31.8.2019, therefore, as per the Ld. CIT(A), the appellant was required to file such Form before 1.8.2019. According to Ld. CIT(A), unless delay in filing such Form is condoned by the Pr. Commissioner of Income Tax under section 119(2)(b) of the Act, no credit can be allowed to the appellant. 4. We have heard rival submission of parties and perused the relevant material on record. In our opinion, the appellant has already complied by way of filing Form No. 67 under rule 90/91 of the Rules though there is slight delay in filing Form along with the return of income. We are of the view that vested right of the assessee for claim of foreign tax credit cannot be denied for some procedural lapse. In the case of M/s 42 Hertz Software India Pvt Ltd. Vs the Assistant Commissioner of Income Tax, Circle 3 (1)(1), Bangalore, in ITA No. 29/Bang/2021 , the coordinate Bench held that: 6. There is no dispute that the Assessee is entitled to claim FTU On perusal of provisions of Rule 128 (8) & (9), it is clear that, one of the Anand Mahabal Shetty 3 requirements of Rule 128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns. In our view, this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No 67 This view is fortified by the decision of coordinate bench of this Tribunal in case of Ms. Brindu Kumar Krishna us. ITO in ITA no.454/ Bang/2021 by order dated 17/11/2021. 4.1 Therefore in the interest of justice, we condone the delay in filing such Form No. 67 and restore the matter back to the file of Ld. Assessing Officer for allowing the credit of foreign taxes paid after due verification under the provisions of law. Ground No. 1 & 2 of the appeal are accordingly allowed. 4. Ground No. 3&4 of the appeal being consequential and therefore the same are dismissed as infructuous. 5. In the result, the appeal of the appellant is allowed. Order pronounced in the open Court on 18/03/2025. Sd/- Sd/- (KAVITHA RAJAGOPAL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 18/03/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "