BIDYUT PRAKAS BHATTACHARYA,KOLKATA V. I.T.O., WARD - 52(1), KOLKATA

ITA 2016/KOL/2024

AI Insights

The case revolves around the denial of Foreign Tax Credit (FTC) to Bidyut Prakas Bhattacharya for the assessment year 2018-19. The FTC was claimed for taxes paid in Kenya, which were filed in Form No. 67. However, the form was submitted two days post the filing of the income tax return, leading to the denial of the credit by the Centralized Processing Center (CPC), Bengaluru. The assessee's appeal to the Commissioner of Income Tax (Appeals) was dismissed, prompting the appeal to the Tribunal. The Tribunal's decision emphasized that procedural requirements like the timely filing of Form No. 67 do not override substantive rights under the Act and the DTAA.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780254 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 27-09-2024
• Other Referred Cases: Swapan Bhattacharya vs. ACIT, Circle-61, Kolkata, Rahul Anand vs. ADIT (CPC, Bengaluru), Jaspal Singh Bindra vs. DCIT, Duraiswamy Kumaraswamy vs. PCIT, Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, Engineering Analysis Centre of Excellence (P.) Ltd. vs. Commissioner of Income-tax, CIT vs. G.M. Knitting Industries (P) Ltd., Brinda Ramakrishna vs. ITO, 42 Hertz Software India Pvt. Ltd vs Asst. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Set aside; Revised return; Reasonable cause; Salary income; Capital Gains; Rectification of order; Double taxation relief; Revision of order; Residential status
• Section: 143(3); 154; 90; 139; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya Vs. I.T.O., Ward-52(1), Kolkata (Appellant) (Respondent) PAN: AGSPB8098B Appearances: Assessee represented by : None. Department represented by : Kallol Mistry, JCIT, Sr. DR. Date of concluding the hearing : 28-July-2025 Date of pronouncing the order : 07-October-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 30.07.2024, which has been passed against the rectification order u/s 154 of the Act, dated 06.06.2023. 2. The assessee is in appeal before the Bench raising the following grounds of appeal: “1. That on facts as well as on law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), has erred in confirming the order under section 154 read with section 143(1) without allowing Foreign Tax Credit (FTC) amounting to Rs. 6,39,970 irrespective of the fact that the same was duly claimed in the income tax return as per provisions of the Income Tax Act. Printed from counselvise.com Page | 2 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. 2. That on facts as well as on law, the Learned Commissioner of income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred in confirming the order under section 154 read with section 143(1) without taking into consideration the fact that Form 67 in relation to Foreign Tax Credit (FTC) was duly filed before the last date for filing of the income tax return. 3. That on facts as well as on law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred in confirming the levy of interest under section 234A amounting to Rs. 38,394. 4. That on facts as well as on law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred in confirming the levy of interest under section 234B amounting to Rs. 1,72,773. 5. That on facts as well as on law, the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred in confirming the levy of interest under section 234C amounting to Rs. 32,317. 6. That your appellant begs your leave to urge any additional ground or modify any grounds at the time of hearing.” 3. Brief facts of the case and the submissions made before the Ld. CIT(A) as culled out from the order of the Ld. CIT(A) as stated in Form No. 35 are as under: “The assessee individual had filed his income tax return for assessment year 2018-19 on 12 February, 2019 claiming foreign tax credit amounting to Rs. 6,39,970 which was paid in Kenya against salary income from Kenya. The prescribed Form 67 towards claim of foreign tax credit could not be filed by mistake before filing of income tax return. The same was filed on 14 February, 2019 which was the two days after filing of income tax return. Hence, the assessee had correctly complied with the provision of Rule 128. Thereafter, the income tax return was duly processed by the CPC, Bengaluru and foreign tax credit amounting to Rs. 6,39,970 was denied without any reasons even though Form 67 was duly filed in the income tax portal. Hence, there was a demand of Rs.8,83,450 as per intimation under section 143(1) due to unjustified denial of foreign tax credit. The appellant would like to prefer an appeal before the 1 appellate authority on the below mentioned grounds: 1. Impugned denial of claim for foreign tax credit amounting to Rs. 6,39,970 in tax computation Printed from counselvise.com Page | 3 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. Your Honour may kindly note that the foreign tax credit is governed by Rule 128 which is a procedural provision and not a mandatory provision. Rule 128(9) provides Form 67 should be filed on or before the due date of filing of return of income as prescribed under section 139(1). However, the Rule nowhere provides that if the said Form 67 is not filed within the above stated time frame, the relief as sought by the assessee under section 90 of the Act would be denied. If the intention was to deny foreign tax credit, either the Act or the Rules would have specifically provided that the foreign tax credit would not be allowed if the assessee does not file Form 67 within the due date under section 139(1). In the instant case, the assessee had filed Form 67 after due date of filing of return of income. Therefore, foreign tax credit cannot be denied due to violation of procedural norm because it does not extinguish the substantive right of claiming the foreign tax credit. Filing of Form 67 as per provision of section 90 read with Rule128(9) is a procedural law and shall not control the claim of foreign tax credit. In view of above, your Honour may kindly give necessary direction to the Learned Assessing Officer in this regard so that the appellant can get the benefit towards the claim for foreign tax paid in Kenya against his salary income in determining his final tax liability. 2. Impugned levying interest under section 234A amounting to Rs. 38,394. The Learned Deputy Director of Income Tax, CPC, Bengaluru, has passed the order under section 154 in ignoring the foreign tax credit amounting to Rs 6,39,970 resulting into a tax on unjustified denial of foreign tax credit in the rectification under section 154. The CPC, Bengaluru had wrongly calculated tax on its entire tax liability which is unsustainable and bad in law. As a consequence, it has resulted into impugned levy of interest under section 234A amounting to Rs. 38,394 which is consequential in nature. In view of above, the impugned levy of interest under section 234A amounting to Rs. 38,394 is liable to be summarily rejected. 3. Impugned levying interest under section 234B amounting to Rs. 1,72,773. The Learned Deputy Director of Income Tax, CPC, Bengaluru, has passed the order under section 154 in ignoring the foreign tax credit amounting to Rs 6,39,970 resulting into a tax on unjustified denial of foreign tax credit in the rectification under section 154. The CPC, Bengaluru had wrongly calculated tax on its entire tax liability which is unsustainable and bad in law. As a consequence, it has resulted into impugned levy of interest under section 234B amounting to Rs. 1,72,773 which is consequential in nature. Printed from counselvise.com Page | 4 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. In view of above, the impugned levy of interest under section 234B amounting to Rs. 1,72,773 is liable to be summarily rejected. 4. Impugned levying interest under section 234C amounting to Rs. 32,317. The Learned Deputy Director of Income Tax, CPC, Bengaluru, has passed the order under section 154 in ignoring the foreign tax credit amounting to Rs 6,39,970 resulting into a tax on unjustified denial of foreign tax credit in the rectification under section 154. The CPC, Bengaluru had wrongly calculated tax on its entire tax liability which is unsustainable and bad in law. As a consequence, it has resulted into impugned levy of interest under section 234C amounting to Rs. 32,317 which is consequential in nature. In view of above, the impugned levy of interest under section 234C amounting to Rs. 32,317 is liable to be summarily rejected.” 4. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who vide order dated 30.07.2024 dismissed the appeal of the assessee by holding as under: “6.1 Grounds of Appeal No. 1 to 4: In these grounds, the appellant has raised the issue of denial of claim for foreign tax credit amounting to Rs.6,39,970/- in tax computation. 6.2 The appellant had filed return of income on 12.02.2019 claiming foreign tax credit of Rs.6,39,970/-. Further, the appellant filed Form No. 67 on 14.02.2019. 6.3 The moot question that arises is whether the FTC claimed by the appellant can be allowed, even if requirement mentioned in Rule 128(9) has not been fulfilled by the appellant? Whether the requirement mentioned in the relevant rule is only procedural in nature or mandatory in nature which is vital to the claim of FTC? The questions arisen are duly discussed in the following paras 6.4 One of the requirements of Rule 128 for claiming FTC is prescribed by Rule 128(8) & (9) of the Rules and the same reads as under:- \"(8) Credit of any foreign tax shall be allowed on furnishing the following documents by the assessee, namely:- (i) a statement of income from the country or specified territory outside India offered for tax for the previous year and of foreign tax deducted or paid on such income in Form No.67 and verified in the manner specified therein; Printed from counselvise.com Page | 5 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. (ii) certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee,- (a) from the tax authority of the country or the specified territory outside India; Or (b) from the person responsible for deduction of such tax; or (c) signed by the assessee: Provided that the statement furnished by the assessee in clause (c) shall be valid if it is accompanied by,-- (A) an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee; (B) proof of deduction where the tax has been deducted. statement in Form No.67 referred to in clause (i) of sub-rule (9) The (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under subsection (1) of section 139, in the manner specified for furnishing such return of income.\" 6.5 The plain reading of the Rule 128(9) of the I.T. Rules, 1963, shows that the appellant is required to furnish Form No. 67 within the due date specified for furnishing the return of income under sub-section (1) of Section 139 of the Act. 6.6 The appellant has relied on various judicial pronouncements. It is pertinent to mention that the judgments are not binding in the case of the appellant as the same have not been passed by the jurisdictional High Court and ITAT of the appellant. 6.7 Moreover, contrary to the decisions quoted by the appellant, this issue has been discussed at length in the decision by the Hon'ble ITAT. Visakhapatnam that whether Rule 128(9) is directory or mandatory in nature vide its order in ITA no. 269/Viz/2021 dated 14.06.2022. It has been held by the Hon'ble ITAT as under: \"4. The only issue with respect to the grounds raised by the assessee is regarding non-filing of Form 67 and consequential denial of foreign tax Printed from counselvise.com Page | 6 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. credit by invoking the Rule 128(9) of the IT Rules. The Ld. AR submitted that filing of Form 67 is not mandatory but only a directory and hence delay in filing Form 67 is not a valid ground for denial of foreign tax credit as claimed by the assessee in the return of income filed by the assessee. The Ld. AR relied on the Bangalore Bench of the Tribunal in the case of M/s. 42 Hertz Software India Pvt Ltd vs. ACIT in ITA No. 29/Bang/2021, dated 7/3/2022. The Id. AR also submitted that Form 67 was filed before the completion of scrutiny assessment. Per contra, the Ld. DR supported the orders of the Ld. Revenue Authorities and stated that Form 67 is mandatory in nature to claim any foreign tax credit under Rule 128(9) of the IT Rules, 1962. The Ld. DR pleaded that the order of the Ld. Revenue Authorities be upheld. 5. We have considered the rival contentions and the orders of the authorities below. Based on the written submissions made by the assessee's representative, we find that the Form 67 was not filed by the tax consultant of the assessee due to oversight and pleaded that mistake may be considered as technical mistake and there was a reasonable cause. We find no merit in the submissions made by the assessee's representative that the above reason mentioned by the assessee in its written submissions is reasonable. The assessee has realized the filing of Form 67 only after the scrutiny proceedings were initiated by the AO. We also note that Form 67 has been filed with a delay of more than two years without any valid and reasonable cause. We also extract herein below Rule 128(9) of the IT Rules, 1962 for reference: \"128 (9) The statement in Form No.67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under subsection (1) of section 139, in the manner specified for furnishing such return of income.\" 6. From the plain reading of Rule 128(9) of the IT Rules, it is clear that the statement in Form-67 shall be furnished on or before the due date specified for furnishing the return of income under sub-section(1) of section 139 of the Act. Therefore, we are of the considered view that since the word \"shall\" has been used in the Rule 128(9) that it is mandatory in nature and not directory as claimed by the Ld. AR. We therefore find no infirmity in the order of the Ld. CIT(A), NFAC and hence no interference is required. 7. in the result, appeal filed by the assessee is dismissed.\" 6.8 The appellant has filed form 67 on 14.02.2019 whereas the due date for filing the ITR u/s 139(1) was 31.08.2018. Thus, there is no dispute that Form 67 was filed by the appellant after the due date. Printed from counselvise.com Page | 7 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. 6.9 In light of above decision of the Hon'ble ITAT, Visakhapatnam analyzing the rule 128(9) of the Act, it is amply clear that requirements of the Rule 128 for claiming FTC regarding filing of form 67 before the due date specified for furnishing of the return of income under sub-section (1) of section 139 is mandatory in nature. It is an undisputed fact that the appellant has failed to file form no. 67 before due date specified for furnishing of the return of income under sub-section (1) of section 139. Therefore, the AO has rightly rejected the claim of Foreign Tax Credit of the appellant as not allowable to the appellant. Hence, I do not find infirmity in the order of the AO. Accordingly, these grounds of appeal are dismissed.” 5. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 6. None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 7. We have considered the submission made. The facts are similar to those in the case of Swapan Bhttacharya vs. ACIT, Circle-61, Kolkata in ITA No. 242/KOL/2025 order dated 05.05.2025 (in which the Accountant Member was part of the Bench) in which the Coordinate Bench has held as under: “5. Rival submissions were heard and the record and the submissions made have been examined. During the course of the appeal, the Ld. DR submitted that the Form No. 67 was filed on 30.03.2019, which was late and was filed beyond the due date of filing the return of income. The Ld. AR submitted that during the year the income was earned in USA and section 90 of the Act read with the DTAA was applicable. Though Form No. 67 was filed late but the same was filed on 30.03.2019 and was available at the time of processing of the return of income carried out u/s 143(1) of the Act on 25.12.2019 as well as at the time of completion of assessment under section 143(3) of the Act on 27.12.2019 and, therefore, the credit for Foreign Taxes paid in the USA should have been allowed. Reliance was placed by the Ld. AR on the case of Rahul Anand vs. ADIT (CPC, Bengaluru) in ITA No. 1497/KOL/2024 order dated 06.12.2024, a copy of which was filed along with the case law paper book in which reliance has also been placed upon several other judicial pronouncements. The Ld. DR submitted that the assessee had filed multiple returns which was countered by the Ld. DR by Printed from counselvise.com Page | 8 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. stating that the return was revised but in the computation sheet, different figure has been adopted by the Ld. AO. Our attention was drawn to the computation sheet in which the figure of Rs. 2,49,43,470/- was adopted while in the assessment order u/s 143(3) of the Act, the total income is assessed at Rs. 2,23,86,630/- which is the same as the income as per the return of income. Our attention was further drawn to column 14 of the computation sheet in which total income after deduction is shown at Rs. 2,49,43,470/- while in column 16 the aggregate income is shown at Rs. 2,23,86,630/-. The assessee had claimed the refund but on the contrary demand was raised. The Ld. CIT(A) did not consider the ground relating to the enhanced income. An application filed u/s 154 of the Act filed was rejected. After analysis of the computation sheet, it was noted that the income from capital gains shown at Rs. 68,28,041/- was not correct which as per the final revised return at pages 22 to 27 of the paper book was shown at Rs. ‘NIL’ on account of short term capital gains earned outside India and set off of brought forward losses for A.Y. 2016-17. It was submitted that the Ld. CIT(A) did not adjudicate this issue in the appeal. The Ld. DR vehemently supported the order of the Ld. CIT(A). 6. We have gone through the submissions made and also considered the facts of the case. Similar issue arose in the case of Jaspal Singh Bindra vs. DCIT in ITA No. 1826/KOL/2024 order dated 19.11.2024 in which the Coordinate Bench (in which the Accountant Member was a member) on similar issue of FTC allowed the appeal. The following cases have been referred in the said order as well as in the order of Rahul Anand (supra) relied upon by the assessee: i. CIT vs. G.M. Knitting Industries (P) Ltd. 71 Taxmann.com 35(SC) ii. Brinda Ramakrishna us. ITO 193 ITD 840 (Bang) iii. 42 Hertz Software India Pvt. Ltd vs Asst. CIT. ITA No. 29/ Bang/2001 iv. Duraiswamy Kumaraswamy vs. PCIT, W.P. No.5834 of 2022 7. Before proceeding further, we would like to reproduce rule 128 of the Income-tax Rules, 1962 (the Rules) which relates to foreign tax credit and is as under: \"Foreign Tax Credit. 128 (1) An assessee, being a resident shall be allowed credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such lax has been offered to Printed from counselvise.com Page | 9 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. tax or assessed to tax in India, in the manner and to the extent as specified in this rule: Provided that in a case where income on which foreign tax has been paid or deducted, is offered to tax in more than one year, credit of foreign tax shall be allowed across those years in the same proportion in which the income is offered to tax or assessed to tax in India.\" 8. We further note that section 90 of the Act provides that Government of India can enter into Agreement with other countries for granting relief in respect of income on which taxes are paid in country outside India and such income is also taxable in India. Article 25 of DTAA between India and USA provides for credit for foreign taxes. Article 25(2)(a) is relevant in the present context and the same is extracted below: \"Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the United States, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States.\" 9. Thus, Section 90 of the Act read with Article 25(2)(a) of the DTAA provides that tax paid in USA shall be allowed as a credit against the tax payable in India but limited to the proportion of Indian tax. Neither section 90 nor the DTAA provides that FTC shall be disallowed for non-compliance with any procedural requirement. Foreign Tax Credit is an assessee's vested right as per Article 25[2](a) of the DTAA read with Section 90 and same cannot be disallowed for non-compliance with procedural requirement as prescribed in the rules. 10. Further, we would like to mention that rule 128(9) provides that Form No. 67 should be filed on or before the due date of filing the return of income as prescribed u/s 139(1) of the Act. However, the rule nowhere provides that if the said Form No. 67 is not filed within the required time frame, the relief as sought by the assessee u/s 90 of the Act would be denied. It is therefore evident that if the intention of the legislature were to deny the foreign tax credit, either the Act or the rules would have specifically provided that the foreign tax credit would be disallowed if the assessee does not file Form No. 67 within the due date prescribed under section 139(1) of the Act. We further note that as is judicially held, filing of Form No. 67 is a procedural/directory requirement and is not a mandatory requirement and violation of procedural norm does not extinguish the substantive right of Printed from counselvise.com Page | 10 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. claiming the credit of FTC and such is the finding in the cases of the coordinate Benches referred to in the order of Jaspal Singh Bindra (supra). 11. Hon'ble Supreme Court, in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, [1992 Supp (1) Supreme Court Cases 21] in respect of compliance with the procedural requirements have observed that: \"The mere fact that it is statutory does not matter one way of that other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.” 12. Further, in the case of Engineering Analysis Centre of Excellence (P.) Ltd. vs. Commissioner of Income-tax [2021] 125 taxmann.com 42 (SC)/[2021] 281 Taxman 19 (SC)/[2021] 432 ITR 471 (SC), Hon'ble Supreme Court have held as under that the provisions of DTAA shall override the provisions of the Income-tax Act unless they are more beneficial to the assessee: 165. The conclusions in the aforestated paragraph have no direct relevance to the facts at hand as the effect of section 90(2) of the Income-tax Act, read with explanation 4 thereof, is to treat the DTAA provisions as the law that must be followed by Indian courts, notwithstanding what may be contained in the Income-tax Act to the contrary, unless more beneficial to the assessee. 13. We have gone through the decisions of the coordinate Benches and concur with their findings in this regard that filing of Form No. 67 is directory and not mandatory and the credit for foreign taxes paid cannot be denied merely on the delay in filing the Form No. 67. 14. We have also gone through the decision of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy us. PCIT (supra) and find that the facts are identical to the facts of the case of the assessee and the decision is squarely applicable to the facts of the case of the assessee. In that case, the petitioner was resident of India and had filed Indian ITR and claimed benefit of FTC u/s 90/91 of the Act r.w. Article 24 of the India- Kenya DTAA. During the year, he had income of both Kenya and India but while filing the Indian ITR for the impugned assessment year 2019-20, the Form No. 67 prescribed in rule 128 of the rules for claiming FTC was inadvertently not uploaded along with the ITR which was uploaded on 02.02.2021 The return was processed on 26.03.2021, however, the credit of FTC was not given effect to and the request made to the CPC to give effect to the FTC was not accepted and intimation along with notices of demand was received. The assessee also could not succeed with the rectification Printed from counselvise.com Page | 11 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. application filed and approached the CIT u/s 264 of the Act and at the same time filed a writ petition before the Hon'ble Madras High Court. It was stated by the respondent-department that rule 128 is mandatory and cannot be considered as directory in nature. The petitioner referred to the judgment of the Hon'ble Supreme Court in the case of CIT vs. G.M. Knitting Industries (P) Ltd. Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015. The Hon'ble High Court allowed the Writ Petition in favour of the assessee by holding as under:- “11. The law laid down by the Hon'ble Apex Court in Commissioner of Income Tax, Maharashtra v. G.M. Knitting Industries (P) Limited in Civil Appeal Nos. 10782 of 2013 and 4048 of 2014 dated 24.06.2015, which was referred above, would be squarely applicable to the present case. In the present case, the returns were filed without FTC, however the same was filed before passing of the final assessment order. The filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. This is what the Hon'ble Supreme Court had held in the above cases when the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order. W P. No 5834 of 2022. 12. Further, in the present case, the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore, the impugned order is liable to be set aside. 13. Accordingly, the impugned order dated 25.01.2022 is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Further, it is made clear that the impugned order is set wade only to the extent of disallowing of FTC clam made by the petitioner und hence, the first respondent is directed to consider only on the aspect of rejection of FTC clam within a period of 8 weeks from the date of receipt of copy of this order\" 15. Respectfully following the order of the Hon'ble Madras High Court in the case of Duraiswamy Kumaraswamy vs. PCIT (supra) and concurring with the views held by the coordinate Benches of the Tribunal in the cases relied upon in the cases of Rahul Anand and Jaspal Singh Bindra (supra), we hold that merely because the assessee could not file Form No. 67 within the Printed from counselvise.com Page | 12 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. prescribed time limit as per the provisions of rule 128(9) of the Income-tax rules, 1962, as it stood during the year under consideration, will not preclude the assessee from claiming the benefit of the Foreign Tax Credit in respect of taxes paid outside India. Therefore, the claim of the assessee is allowed and the Assessing Officer is directed to give benefit of Foreign Tax Credit in respect of taxes paid outside India by the assessee in accordance with law and the DTAA between India and the USA. Accordingly, Ground no. 2 of the appeal is allowed. 16. As regards Ground no. 3, the Ld. AO is directed to verify the return of income with the computation made and allow the requisite relief as pre law as the tax computation apparently has been made on a higher income and the figure of capital gains has been incorrectly adopted. This ground of appeal is allowed for statistical purposes.” 8. Hence, relying upon the decision of the coordinate Bench in the case of Swapan Bhttacharya (supra) which has referred to the decision of Duraiswamy Kumaraswamy (supra) and Rahul Anand (supra), it is held that the filing of Form No. 67 is directory and not mandatory, and the provisions of DTAA override the provision of the Income tax Act, the credit for foreign tax is allowable to the assessee. Hence, Ground Nos. 1, 2, 3 and 4 are allowed and the Ld. AO is directed to allow the credit for foreign taxes in accordance with law. 9. Ground no. 5 being general in nature does not require any separate adjudication. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 7th October, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 07.10.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 13 I.T.A. No.: 2016/KOL/2024 Assessment Year: 2018-19 Bidyut Prakas Bhattacharya. Copy of the order forwarded to: 1. Bidyut Prakas Bhattacharya, EE-142/3, Salt Lake, Sech Bhawan, Kolkata, West Bengal, 700091. 2. I.T.O., Ward-52(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "