DCIT, CIRCLE - 19(1), DELHI V. RST MINING AND LOGISTICS PVT. LTD., DELHI

ITA 4700/DEL/2024

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The case involves RST Mining and Logistics Pvt. Ltd., which claimed a foreign tax credit for taxes paid on income earned abroad, as per the Double Taxation Avoidance Agreement (DTAA) with the respective country. Initially, the Central Processing Centre (CPC) in Bangalore did not consider this claim because Form No. 67 was not filed with the original return. After the assessee submitted Form No. 67 and requested a rectification, the CPC rejected the claim citing non-compliance with Rule 128 of the Income Tax Rules, 1962. The CIT(A) overturned this decision, leading to the Revenue's appeal to the Tribunal. The Tribunal's decision affirmed the CIT(A)'s ruling, allowing the FTC claim based on the merits of the case rather than strict procedural compliance.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31072 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2020-2021
• Other Referred Cases: Deputy Commissioner of Income Tax Circle-3(3)(1), Banglore Vs. Shri Vivek Singhal, ADIT CPC Bangalore vs. Rahul Anand, ITO ward 5(2)(4) Noida, Vs. Suchi Agarwal, DCIT Circle-1(1), Gurgaon vs. Ajay Kumar Mishra, CIT(A) Faceless Appeal Centre Delhi Vs. Rohan Hattangadi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: PAWAN CHHIKARA
• Keywords: Revised return; Rectification of order; Double taxation relief; Non compliance
• Section: 154; 143(1); 139(1); 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘F’: NEW DELHI) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER ITA No:- 4700/Del/2024 (Assessment Year- 2020-21) DCIT, Circle -19(1), Delhi. Vs. RST Mining and Logistics Pvt. Ltd.,D-17 A, Ansal Vilas, Chandanhoola, Chattarpur, South West Delhi, Delhi. PAN No: AAECR0878A APPELLANT RESPONDENT Revenue by : Ms. Harpreet Kaur Hansra, Sr. DR Assessee by : Sh. Pawan Chhikara, CA Date of Hearing : 02.04.2025 Date of Pronouncement : 04.04.2025 ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: Present appeal has been filed by the Revenue against the order passed by the National Faceless Appeal Centre (NFAC)( hereinafter referred to as “CIT(A)”) ,u/s 250(6) of the Income Tax Act, 1961(in ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 2 short “Act”) in first appeal against the order passed by the CPC rejecting assessees application u/s 154 of the Act seeking rectification of the intimation made on the assessee u/s 143(1) of the Act and pertains to assessment year (A.Y) 2020-21. 2. The assessee had filed its original and revised return of income admitting the income earned in a foreign country and to that extent the tax deducted in that foreign country had been claimed as relief u/s 90/91 of the Act as per the provisions of DTAA agreement with that country. The CPC, Bangalore processed the revised return of the assessee u/s 143(1) of the Act without considering the relief claimed of FTC, for the reason that form No.67 was not filed by the assessee alongwith the return of income filed u/s 139(1) of the Act. Subsequently, the assessee filed the necessary F.No.67 and requested rectification of the order u/s 143(1) of the Act, but the same was rejected for non-compliance with the provisions of Rule 128 of the Income Tax Rules, 1962, which require Form No.67 to be filed alongwith the return of income u/s 139(1) of the Act. 3. The Ld. CIT (A) however held that the requirement of Rule 128 was obligatory and not directory, the only purpose being verifying the ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 3 merit of claim under section 90/91 of the Act. And noting that the requisite form number 67 was available with the CPC at the time of deciding the rectification application, he held the denial of claim of the assessee of foreign tax credit u/s 90/91 of the Act as bad in law and directed the AO to entertain the claim of the assessee on merits. The relevant findings of the Ld. CIT(A) in this regard are contained at para 5 -5.1 of the order as under: “ 5. Decision:- Background facts, rectification order, grounds of appeal and submissions of the appellant and relied case laws are carefully considered. Brief of 5. the facts of the case is that the appellant has filed its original and revised return of income admitting the income eamed in a foreign country and to that extent the tax deducted in that foreign country has been claimed as relief under section 90/91 of the act as per the provisions of the DTAA agreement with that foreign country. The Central Processing Centre, Bengaluru has processed the revised return of the appellant under section 143(1) without considering the relief claimed u/s. 90/91 for the reason that Form No.67 was not filed along with the return of income filed under section 139(1) of the act. 5.1 Subsequently the appellant has filed Form No.67 on 11.01.2022 and requested for rectification of the order u/s.143(1) of the act. But the CPC, Bengaluru has rejected the claim of the appellant u/s. 154 of the act for non compliance of provisions under Rule 128 of the Income Tax Rules 1962. The relevant extract of sub rule (9) under Rule 128 is as under-: “ 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 retum of income under subsection (1) of section 139, in the manner specified for furnishing such return of income\" It is evident from the Rule mentioned above that filing of Form No.67 along with the return of income is obligatory and not directory as per the word 'shall used in the provision and for the purpose of verifying the merit of the claim under section 90/91 of the act. At any stretch of ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 4 imagination the legislation under the act is not against the denial of legitimate claims of the assessee that too when the foreign income is considered for taxation purposes. The Hon'ble Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. laid down the proposition that procedural law should not be construed as mandatory and should only aid the claim of substantive right. Respectfully following the proposition laid down by the Apex Court cited supra and from the fact that Form No.67 was well available with the CPC at the time of deciding the rectification application of the appellant, the denial of claim of the appellant under section 90/91 is bad in law. Hence the AO is directed to entertain the claim of the appellant on merits.” 4. Aggrieved by this order of the Ld. CIT(A), the Revenue has come up in appeal before us raising the following grounds: “ i) \"Whether on facts and circumstances of the case and in law, the Ld. CIT(A), has erred in accepting the claim of the assessee of foreign tax credit amounting to Rs. 1,03,05,677/- while the assessee has not filed the requisite Form 67 within the stipulated time in Rule 128 of the Income Tax Rule 1962.\" (ii) \"Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding the provisions of Rule 128 of the Income Tax Rules 1962 as procedural instead of mandatory in nature.\" (iii) \"The appellant craves to be allowed to add any fresh ground(s) of appeal and or deleted or amend any of the ground(s) of appeal.\" 5. We have heard both the parties. As is evident from the grounds raised by the Revenue before us, the solitary grievance of the Revenue is against the Ld. CIT(A) holding Rule 128 of the Income Tax Rules,1962, as being directory in nature and in turn allowing ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 5 assesses claim to FTC despite filing form No. 67 belatedly and not alongwith the return of income u/s 139(1) of the Act. 6. The Ld. Counsel for the assessee, during the course of hearing, pointed out that the finding of the Ld. CIT(A) is supported by various decisions of the ITAT wherein Rule 128 of the Rules, has been held to be directory in nature and assesses allowed claim of FTC even against belated Form 67 filed. Our attention was drawn to the following decisions of the ITAT: “1. Order dated 06.01.2025 in the case of Deputy Commissioner of Income Tax Circle-3(3)(1), Banglore Vs. Shri Vivek Singhal in ITA No. 1606/Bang/2024. 2. Order dated 06.12.2024, in the case of ADIT CPC Bangalore vs. Rahul Anand in ITA No.- 1497/Kol/2024 3. Order dated 31.05.2024, in the case of ITO ward 5(2)(4) Noida, Vs. Suchi Agarwal, in ITA No.- 601/Del/2024 4. Order dated 17.04.2023, in the case of DCIT Circle-1(1), Gurgaon vs. Ajay Kumar Mishra, in ITA No.- 1835/Del/2022 5. Order dated 02.12.2022, in the case of CIT(A) Faceless Appeal Centre Delhi Vs. Rohan Hattangadi, in ITA No.- 1896/Mum/2022.” ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 6 7. The Ld. DR was unable to distinguish the decisions relied upon by the Ld. Counsel for the assessee and was also unable to point out any contrary decision of the Hon’ble High Courts or for that matter the Hon’ble Apex court on the issue. 8. In the light of the same we do not find any infirmity in the order of the Ld. CIT(A) allowing assessees rectification application seeking claim of foreign tax credit by way of belated filing of Form No. 67, holding the requirement of Rule 128 of the Rules ,of filing Form 67 alongwith return of income filed u/s 139(1) of the Act ,as directory, which finding, has been duly demonstrated before us to be supported and to be consistently held so by the ITAT in various decisions noted above. 9. In view of the above the grounds of appeal raised by the Revenue are dismissed. 10. Appeal of the Revenue is dismissed. Order pronounced in the open court on 04.04.2025 Sd/- Sd/- (MADHUMITA ROY) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 7 Dated: 04.04.2025 Pooja, Sr. PS/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, Delhi ITA No.- 4700/Del/2024 RST Mining and LogisƟcs Pvt. Ltd. 8 Sr. No. Particulars Date 1 Date of dictation of Tribunal Order 2 Date on which the typed draft Tribunal Order is placed before the Dictation Member 3 Date on which the typed draft Tribunal Order is placed before the other Member 4 Date on which the approved draft Tribunal Order comes to the Sr. P.S. /P.S. 5 Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6 Date on which the signed order comes back to the Sr. P.S. /P.S 7 Date on which the final Tribunal Order is uploaded by the Sr. P.S. /P.S. on official website 8 Date on which the file goes to the Bench Clerk along with Tribunal Order 9 Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10 Date on which the file goes to the Supervisor (Judicial) 11 Date on which the file goes for Xerox 12 Date on which the file goes for endorsement 13 Date on which the file goes to the superintendent for checking 14 The date on which the file goes to the Assistant Registrar for signature on the tribunal order 15 Date on which the file goes to dispatch section 16 Date of Dispatch of the Order "