Vitthal Srinivasan, Bengaluru V. ADIT, CPC, Bengaluru

ITA 1087/BANG/2022

AI Insights

The case involves an appeal by the assessee, M/s. Vitthal Srinivasan, against the order of the National Faceless Appeal Centre (NFAC), Delhi, which denied the foreign tax credit claimed for the Assessment Year 2019-20. The assessee had earned income in the USA and paid taxes there, for which he claimed a credit in India under the Double Taxation Avoidance Agreement (DTAA) and Section 90 of the Income Tax Act, 1961. The AO initially rejected this claim because Form 67, required for claiming the foreign tax credit, was filed after the due date for filing the return of income but before the intimation under Section 143(1) of the Act. The Tribunal, referencing previous decisions, held that the procedural requirement of filing Form 67 within the stipulated time does not override the substantive rights conferred by the DTAA and Section 90 of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299859 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-01-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 27-11-2022
• Other Referred Cases: Brinda RamaKrishna vs. TO, Vinodkumar Lakshmipathi vs. CIT(A)
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G. SIDDESH
• Keywords: Double taxation relief
• Section: 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC -C” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT ITA No.1087/Bang/2022 Assessment Year : 2019-20 M/s. Vitthal Srinivasan, No.A-1102 Mantri Espana, 67, Kariyammana Agrahar Bellandur, Bengaluru – 560 103. PAN : BTPPS 5944 G Vs.ADIT, Central Processing Centre, Bengaluru. APPELLANTRESPONDENT Assessee by:Shri.G. Siddesh, CA Revenue by :Shri. Ganesh R. Ghale,Standing Counsel Date of hearing:31.01.2023 Date of Pronouncement:02.02.2023 O R D E R This is an appeal by the assessee against the order dated 17.11.2022 of NFAC, Delhi, relating to Assessment Year 2019-20. 2. The assessee is an individual. The assessee filed return of income for Assessment Year 2019-20 on 29.08.2019. In the return, the assessee claimed foreign tax credit in respect of a sum of Rs.3,30,000/-. During the previous year, the assessee earned income in USA and had paid taxes in USA in respect of income so earned. It is not in dispute that in terms of Double Taxation Avoidance Agreement (DTAA) between India and USA r.w.s. 90 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), the assessee is entitled to claim credit for taxes paid in USA on the income earned in USA, which is again taxed in India. The claim was rejected by the AO in intimation passed under section 143(1) of the Act dated ITA No.1087/Bang/2022 Page 2 of 4 23.03.2021 on the ground that in terms of Rule 128 of the Income Tax Rules, 1962 (hereinafter called ‘the Rules’), the assessee was required to file Form 67 for claiming FTC on or before the due date of furnishing return of income under section 139(1) of the Act. It is undisputed that the assessee filed Form 67 on 26.10.2019 after the due date of filing the return of income mentioned under section 139(1) of the Act but before the intimation under section 143(1) of the Act dated 23.03.2021. The CIT(A) confirmed the order of the AO on the same reasoning given by the AO for refusing to give credit for foreign taxes paid. 3. Aggrieved by the order of the NFAC, assessee has preferred the present appeal before the Tribunal. It was undisputed by the parties before us that the issue sought to be adjudicated by the assessee in this appeal has been considered and decided by the ITAT, Bengaluru Benches, in the following cases: Brinda RamaKrishna vs. TO [ITA. No. 454/Bang/2021 Assessment Year: 2018-19 Vinodkumar Lakshmipathi vs. CIT(A) IT APPEAL No. 680 (BANG.) OF 2022 / [2022] 145 taxmann.com 235 (Bangalore Trib.)[06-09-2022] 4. In the aforesaid decisions, the Tribunal took the view that in terms of section 90 of the Act read with the relevant provisions of DTAA between India and the country in which foreign taxes were paid, credit has to be allowed for taxes paid abroad. The Tribunal held that Rule 128 of the Rules cannot override the provisions of DTAA and impose an additional condition that credit will not be given if Form 67 is not filed on or before the due date of filing the return of income as prescribed under section ITA No.1087/Bang/2022 Page 3 of 4 139(1) of the Act. The Tribunal also took the view that even Rule 128 of the Rules does not provide that if Form 67 is not filed within the stipulated time, relief under section 90 of the Act would be denied. The Tribunal also held that filing of Form No.67 is only a procedural and directory requirement and not mandatory requirement for claiming credit for foreign taxes paid. 5. In the light of the aforesaid decision of the Tribunal and in the light of the undisputed fact that Form 67 was filed by the assessee prior to the intimation under section 143(1) of the Act issued by the AO on 23.03.2021, the assessee is entitled to credit for foreign taxes paid and the AO is directed to allow the claim of the assessee in this regard. 6. In the result, appeal of the assessee is allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- (CHANDRA POOJARI) Sd/- (N. V. VASUDEVAN) Accountant Member Vice President Bangalore, Dated: 02.02.2023. /NS/* ITA No.1087/Bang/2022 Page 4 of 4 Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.