Niravsinh Kishoresinh Gehlot, India V. CPC, Bangalore (Present Jurisdiction -Income tax officer, Ward 5(3)(2), Ahmedabad), Gujarat

ITA 1068/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3964 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 17-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR KATIAR
• Keywords: Double taxation relief
• Section: 90; 154; 139(5); 143(1); 201; 207; 139(1); 72; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No . 1 068/Ahd/20 23 ( नधा रण वष / As sess ment Year : 2018 -1 9) N ir av si n h Ki s h or e s i nh Ge hl ot Sh iv a m V a s a nt C h o w k, D h ar m aj , P e tl ad D i st A n an d, A n a n d, G u j ar a t 38 84 3 0 बनाम/ Vs . CP C B a ng a lo r e Pr e s e nt J ur is di c t i on - I n c o m e Ta x O f f ic e r W ar d 5 ( 3 ) (2 ), Ah m e da b a d थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A J T P G 6 2 4 1 P (Appellant) . . (Respondent) अपीलाथ ओर से /Appellant by : Shri Balaji V., AR यथ क ओर से/Respondent by : Shri Sushil Kumar Katiar, Sr. DR D a t e o f H e a r i ng 01/02/2024 D a t e o f P r o n o u nc e me n t 08/02/2024 O R D E R PER Ms. MADHUMITA ROY - JM: Th e in stan t ap peal filed at the instance of the app ellant is directed ag ainst the order dated 2 6. 10. 2 023 p assed by the Co mmis sion er of Income Tax (Appeals) -3, Ch ennai (‘CIT(A)’) arising o ut of the intimation o rd er dated 20. 03 . 2020 passed b y the As se ssing O fficer, u nder Section 143(1) o f th e Act fo r A ss es sment Year 2018-19. 2. We have heard the rival submi ssions mad e by the respective parties and we h ave also perused t he relevant materi als available on reco rd. ITA No. 1068/Ahd/2023 (Niravsinh Kishoresinh Gehlot vs. ITO) A.Y.– 2018-19 - 2 – 3. Th e appellant was a salaried individu al and was e mploy ed with Shell Ind ia Market Private Limited and was sent o n an in ternation al assign men t to Australia fro m 27 t h November, 2 017 to 14 t h Nove mber, 201 8. As the appellant worked in Australia, he was required to offer salary in co me earned therein for th e period co mmen cing fro m 27 t h Nove mber, 2 017 to 14 t h November, 2 018 to tax in Australia and according ly tax was duly paid on the salary earned in Austral ia. Naturally , the tax on su ch salary inco me earned by the app ellant in Australia is no t to be paid in India as th e sa me would be paid twice. In order to avoid double tax ation on salary inco me for the perio d co mmen cing fro m 2 7 t h Nove mber, 2017 to 3 1 s t March, 2018 , th e ap pellan t claimed Foreig n Tax Cred it (‘FTC’) to th e tune of Rs. 6, 38, 960/- for taxes alread y paid in Australia as per Section 9 0 read with Article 24(4) of the India- Australia Dou ble Taxation Avoidance Agreement (‘D TAA’) read with CBDT Circular 333 dated 2 n d April, 1982. The ap pellan t in sup port of such clai m of FTC filed Form No. 6 7 on 11 t h March 2019. The Ld. AO (CPC) h as den ied th e claim o f appellant in respect o f FTC on the g ro und that the appellant had n ot filed For m No. 67 read with Ru le 28 of the I T Ru les i. e. the statement o f in come fro m a cou n try o r specified territory outside Ind ia and FTC within the time limit p rescrib ed under Section 139(1) o f th e Act. 4. Th e case o f th e app ellant before th e First Ap pellate Autho rity and before u s as well is this that he had v erified and sub mitted For m No . 67 on the Income Tax Portal o n 11 t h March, 2019 as ag ainst due date o f 31 s t Ju ly , 201 8 when the return o f ITA No. 1068/Ahd/2023 (Niravsinh Kishoresinh Gehlot vs. ITO) A.Y.– 2018-19 - 3 – in come was sub mitted under Section 139(5) of the Act. Further th at, the clai m o f FTC catego rically disallowed for filing of For m No. 67 after the d ue date of filing of return of inco me under Section 139(1) of the Act as the crux of th e case mad e o ut by the appellant. However, th e appeal preferred by the appellant against th e intimation under Section 143(1) of th e Act is sued for the return of in co me filed under Sectio n 13 9(5) of the Act on 11 t h March, 2019 was rejected, particularly, on this groun d that the JCIT has n ot b een conferred with any such delegation o f po wer to codo ne the delay in filin g Form No . 6 7. It was furth er mention ed in the ord er i mpugn ed befo re u s that the ap pellant, in that event, requires to app ro ach th e appropriate co mp eten t authority to get the delay in filing For m No. 6 7 condoned. At the ti me of hearin g o f th e instant appeal, the Ld. Counsel appearin g for the asses see before us stated that th e issue is squarely covered by th e judgment passed in the Co-ordinate Bench in th e case o f Kewal Niraj Hutheesing vs. ITO in ITA No. 5 59/Ahd/202 2 for A. Y. 20 19-20, th e copy whereof i s annex ed with paper book filed by the appellant befo re us. 5. On the contrary, the Ld. DR relied upon the order pass ed by th e au thorities b elow. 6. On the basis o f th e av ailable fact it app ears that the app ellant had already offere d tax to Australia on income earned th erein fro m th e period fro m 2 7 t h Nov emb er, 2 0 17 to 31 s t March , 20 18 and in ord er to av oid double tax ation of sal ary in come for that perio d, the ITA No. 1068/Ahd/2023 (Niravsinh Kishoresinh Gehlot vs. ITO) A.Y.– 2018-19 - 4 – appellant had claimed F TC to th e tune of Rs. 6, 38 ,960/- for taxes alread y p aid in Australia as per Sectio n 9 0 o f the Act read with Article 24(4) of th e India-Australia Doub le Taxation Avo idance Agree ment (‘DT AA’) read with CBDT Circular 333 d ated 2 n d April, 1982. In fact, we find that the appellant has a vested right to claim FTC und er su ch treaty which ough t not to have been disallo wed by the authorities below merely on the ground of delay in filing For m No. 67. Delay in filing Form No. 67 is a procedural delay , is no t a mandatory on e but a d irectory requirement. Moreso , doub le tax ation avoidance ag reement ov errides the pro visio n of th e Act and th e Ru les can not con trary to th e Act. On th is aspect, we hav e fu rther consid ered the jud gment relied u pon by the Ld. AR in the case of Keval Niraj Hutheesing vs. ITO (Su pra). Wh ile dealing with th e identical issue, the Hon’ble Cou rt was pleased to pass orders relying upon the judg ment passed by th e Bang alore Bench in case of Vin odku mar Lak sh mip athi vs. CIT, wherein ratio laid down by the Hon’b le Apex Court in th e case o f Mangalore Chemi cals & F ertilizers Ltd. vs. DCIT, rep orted in (19 92 Supp (1) S CC 21 ) wa s followed. Th e relevant observ ation whereo f is as follows: “7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has paid the taxes on the income earned in United Kingdom in that country and assessee is asking for credit of the same while filing the return of income. The CIT(A) held that the assessee has not filed Form 67 before time allowed under Section 139(5) of the Act and therefore, Form 67 is non-est in law does not categorically discussed the assessee’s case as the assessee has already paid taxes in UK and as per Article 24(2) of the DTAA between India and UK the foreign income cannot be taxed twice. The decision of Bangalore Tribunal in case of Vinodkumar Lakshmipathi vs. CIT is dealing on the identical situation and the Tribunal has taken cognizance of the same in light of the decision of Hon’ble Supreme Court in case of Mangalore Chemicals & Fertilizers Ltd. vs. DCIT (1992 Supp (1) SCC 21) wherein it was observed as under: ITA No. 1068/Ahd/2023 (Niravsinh Kishoresinh Gehlot vs. ITO) A.Y.– 2018-19 - 5 – “The mere fact that it is statutory does not matter one way or the 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." The Tribunal further held that: Further reliance was placed on the decision of the Hon'ble Supreme Court, in the case of Sambhaji and Others v. Gangabai and Others, reported in [2008] 17 SCC 117, wherein it has been held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. It was submitted that filing of Form 67 as per the provisions of section 90 read with rule 128(9) is a procedural law and should not control the claim of FTC. 12. It was further submitted that even in the context of 80-IA(7), 10A(5) etc, wherein there is specific provision for disallowance of deduction/exemption if audit report is not filed along with the return, various High Courts have taken a view that filing of audit report is directory and not mandatory. Reliance in this regard was placed on the following cases: ♦ CIT v. Axis Computers (India) (P.) Ltd. [2009] 178 Taxman 143 (Delhi) ♦ PCIT, Kanpur v. Surya Merchants Ltd. [2016] 72 taxmann.com 16 (Allahabad) ♦ CIT, Central Circle v. American Data Solutions India (P.) Ltd [2014] 45 taxmann.com 379 (Karnataka) ♦ CIT-II v. Mantec Consultants (P.) Ltd. [2009] 178 Taxman 429 (Delhi) ♦ CIT v. ACE Multitaxes Systems (P.) Ltd [2009] 317 ITR 207 (Karnataka). 13. It was submitted that as per the provisions of section 90(2) of the Act, where the Central Government of India has entered into a DTAA, the provisions of the Act would apply to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. Reliance in this regard is placed on the following cases and circulars: Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) CIT v. Eli Lily & Co. (India) (P.) Ltd. [2009] 178 Taxman 505 (SC) GE India Technology Centre (P.) Ltd. v. CIT [2010] 193 Taxman 234 (SC) Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT [2021] 125 taxmann.com 42 (SC) (Pgs. 106-109 of PB 2-Paras 25 & 26) CBDT Circular No. 333 dated 2/4/82 137 ITR (St.) It was submitted that when there is no condition prescribed in DTAA that the FTC can be disallowed for non-compliance of any procedural provision. As the provisions of DTAA override the provisions of the Act, the Assessee has vested right to claim the FTC under the tax treaty, the same cannot be disallowed for mere delay in compliance of a procedural provision. ITA No. 1068/Ahd/2023 (Niravsinh Kishoresinh Gehlot vs. ITO) A.Y.– 2018-19 - 6 – 14. The learned DR reiterated the stand of the revenue that rule 128(9) of the Rules, is mandatory and hence the revenue authorities were justified in refusing to give FTC. He also submitted that the issue was debatable and cannot be subject matter of decision in sec.154 proceedings which are restricted in scope to mistakes apparent on the face of the record. 15. In his rejoinder, the learned counsel for the Assessee submitted that Form No. 67 was available before the AO when the intimation u/s. 143(1) of the Act dated 28-5- 2020 was passed. He pointed out that the AO or the CIT(A) did not dismiss the Assessee application for rectification u/s. 154 of the Act on the ground that the issue was debatable but rather the decision was given that the relevant rule was mandatory and hence non-furnishing of Form No. 67 before the due date u/s. 139(1) of the Act was fatal to the claim for FTC. 16. I have given a careful consideration to the rival submissions. I agree with the contentions put forth by the learned counsel for the Assessee and hold that (i) rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No. 67; (ii) filing of Form No. 67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. I am of the view that the issue was not debatable and there was only one view possible on the issue which is the view set out above. I am also of the view that the issue in the proceedings u/s. 154 of the Act, even if it involves long drawn process of reasoning, the answer to the question can be only one and in such circumstances, proceedings u/s. 154 of the Act, can be resorted to. Even otherwise the ground on which the revenue authorities rejected the Assessee's application u/s. 154 of the Act was not on the ground that the issue was debatable but on merits. I therefore do not agree with the submission of the learned DR in this regard. 17. In the result, the appeal is allowed.'” 8. Thus, the facts are identical in the present case as well and therefore, we direct the Assessing Officer to give credit for foreign tax as per Form 67 dated 05.04.2021 filed by the assessee prior to the filing of the appeal before the CIT(A) after due verification. 9. In result, appeal of the assessee is partly allowed for statistical purpose.” 7. We find th at it has been held by the Hon’ble Apex C ourt on id entical issue that the Ru le 128 (9 ) o f th e IT Ru les does not pro vide fo r disallowance of FTC i n th e case o f del ay in filing For m No. 67. F iling of such F orm 67 is no t man datory b ut a directory requirement. Moreso , wh en DTAA o v errid es the pro visio n o f the Act, the Rules cannot be contrary to the Act and hence, this righ t to clai m of FTC is a vested righ t o f the app ellant, can not be den ied. We find sufficient case has been made out by ITA No. 1068/Ahd/2023 (Niravsinh Kishoresinh Gehlot vs. ITO) A.Y.– 2018-19 - 7 – th e appellant. Hence, resp ectfully relying up on the sa me, we allow the appeal on this aspect o f filing of Fo rm No . 67. We cond one the delay, if any. We, thu s, direct the Ld. CIT(A) to pass ord ers on merit s trictly in accordance with law u pon giving an opportunity of bein g h eard to the ap pellan t and upon considering the evid ence on record or an y other evid ence whi ch th e appell ant may choo se to fil e at the time o f h earing o f th e mat ter. 8. In the resu lt, the appeal preferred b y th e asse ssee i s allowed fo r statistical purpo ses. This Order pronounced on 08/02/2024 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 08/02/2024 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. "वभागीय &त&न ध, आयकर अपील)य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड/ फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad