PRASHANT VIJAY KALE, THANE V. CPC, INCOME TAX DEPT., , BENGALURU

ITA 2100/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4481 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 17-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIHAR RAJAN SAMAL
• Assessee Lawyers: NOTING WRONG FACTS; GIVING WRONG REASONS
• Keywords: Depreciation; Residential status; Salary income; Double taxation relief; Revised return
• Section: 32; 90; 154; 143(3); 234B; 139(5); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2100/Mum/2021 (Assessment Year 2018-19) Prashant V ija y Kal e 47-403, S wa sti k Re sidenc y, Near Muchha la Co l lege , GB road Ka ve sar, T hane, Mum bai-40 0 615 Vs. National Faceless Appeal Center Centralized Processing Center, Income Tax Department, Bengaluru (Appellant) (Respondent) PAN No. ADAPK8367M Assessee by : Mr. Rajan Vora, Adv Revenue by : Mr. Nihar Rajan Samal, Sr. AR Date of hearing: 21.06.2022 Date of pronouncement : 22.07.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by the assessee for A.Y. 2018-19 against the order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] on 28 September 2021. By the above order, the appeal filed by the assessee against the assessment order dated 18 th March, 2021 passed under Section 143(1) of the Income-tax Act, 1961 (the Act) by the learned DCIT, Central Circle-3, Thane, (the learned Assessing Officer) was dismissed. The assessee is aggrieved and has filed this appeal raising following grounds of appeal:- “1. The NFAC has erred in the facts and circumstances of the case and in law in rejecting the Page | 2 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 claim of the Appellant for Foreign Tax Credit (FTC) of INR 18,66,509 under Article 24(2) of the India-UK Double Taxation Avoidance Agreement (DTAA) read with Section 90 of the Income-tax Act, 1961 (the Act), while computing the income of the appellant. 2. The NFAC has erred in the facts and circumstances of the case and in law in disregarding documentary evidence filed in support of the FTC claimed under Article 24(2) of the India UK DTAA read with Section 90 of the Act i.e. Form 67 duly filed by the Appellant at the time of filing the original return and the revised return of income (on or before the due date for filing) including the computation of foreign tax credit and proof of taxes deducted in UK. 3. The NFAC has erred in facts and circumstances of the case and in law in disallowing the depreciation amounting to INR 1,492 while processing the tax return. 4. The NFAC has erred in the facts and circumstances of the case and in law in imposing interest amounting to INR 24,648 under section 234 A of the Act for alleged delay in filing of the Income Tax Return.. 5. The NFAC has erred in the facts and circumstances of the case and in law in imposing interest of INR 8,29,266/- under section 234B and 234C of the Act. 6. The NFAC has erred in law and facts in imposing fee of INR 5,000-under section 234F of the Act.” Page | 3 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 02. Briefly, stated fact shows that assessee is an individual a resident and ordinarily resident of India as per section 6(1) of the Act. Assessee is also the resident of United Kingdom for Calendar year 2017 as per the tax laws of United Kingdom. Therefore, from 1 April 2017 to 31 March 2018, the tax residency of the assessee was determined as per the provisions of section 4(2) of the India-UK Double Taxation Avoidance Agreement. Undoubtedly, the global income of the assessee was taxable in India and undisputedly, assessee offered the same. 03. The claim of the assessee is that according to Article 24(2) of the Double Taxation Avoidance Agreement, the assessee is eligible for foreign tax credit against the income earned and charged to tax in United Kingdom. The UK income was offered for taxation by assessee in the return of income filed in India. Accordingly, assessee earned salary of ₹68,77,360/- outside India on which foreign tax of ₹18,66,501/- was paid. The tax payable in India was determined at ₹22,90,523/-, against which assessee claimed the above foreign tax of ₹18,66,501/- as a credit [Claimed in Original return of Rs 2313566/-]. 04. Assessee filed his return of income for A.Y. 2018-19 on 23 rd August, 2018, whereas the due date of fling of return was 31 st August, 2018, showing total income of ₹1,02,13,440/-. Assessee claimed foreign tax credit Rs 2313566/- on foreign salary of RS 6944850/- . Form no 67 was filed on 16/8/2018 electronically. Page | 4 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 05. This return was revised on 7 February 2019 at a total income of ₹ 1,01,40,310/-. Along with revised return also filed form no 67 which was filed on 7/2/2019 wherein FTC was claimed at RS 1866501/- , There is also change in Foreign salary Income. 06. The revised return of income was processed by Central Processing Centre, under Section 143(3) of the Act by order dated 18 March 2021. It denied the foreign tax credit as per Circular no. 35 of intimation under Section 143(1) of the Act which was provide by the tax payer in the return of income amounting to ₹18,66,501/- but computed under Section 143(1) of the Act at ₹ nil. Consequent interest demand under Section 234A, B and C as well as 234F was also charged for delay in filing of the return of income, which was mentioned in section 143(1) of the Act intimation as on 7 February 2019. In the return of income in schedule BP, assessee claimed depreciation of ₹1,492/- which was also denied. Thus, the original return filed by the assessee on 23 August 2018 was totally ignored. CPC considered revised return filed under Section 139(5) of the Act on 7 th February, 2019 was considered as the original return and thus, late filing fee under Section 234F of the Act was also levied. This levy is demonstrated at serial no. 39D of ₹5,000/-. 07. Assessee is aggrieved with that order preferred the appeal before the National Faceless Appeal Centre, stating the above facts and challenging intimation under Section 143(1) of the Act. The learned CIT (A) (NFAC) held that assessee has filed return of income on 7 th February, 2019, Page | 5 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 whereas the due date of filing of return was on 31 st August, 2019 and form no. 67 required to be filed for claiming foreign tax credit was furnished on 7 th February, 2019 which is beyond the due date of furnishing return of income and therefore, the claim of the assessee was in accordance with Rule 128 of the Income Tax Rules, 1962 (the Rules). Accordingly, Action of Ld AO in disallowing the foreign tax credit was upheld. The disallowance of depreciation of ₹1,492/- was also upheld and subsequently, charging of interest under Section 234 AB & C as a whole levy of fee of ₹5,000/- under Section 234F of the Act was also confirmed. Thus, the appeal of the assessee is dismissed. 08. Assessee aggrieved with the above order has preferred the appeal before us. 09. The learned Authorized Representative submitted a paper book containing 98 pages. It was submitted that originally the return was filed on 23 rd August, 2018 is completely ignored by the Central Processing Centre. He referred to the acknowledgement placed at page No. 18 of the Paper Book and also referred to computation of total income at page no. 19. He submitted that the assessee has claimed tax relief under Section 90 of the Act in the original return of income which is also demonstrated in Annexure-7, filed by the assessee. He also submitted form no. 67 on 16 th August, 2018 with the original return of income. He also submitted that form no. P-45 of HMRC was also submitted along with Form no. 67 filed with the original return of income. He submitted that the revised return was filed on Page | 6 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 7 th October, 2019 which is also acknowledged in ITR 3 acknowledgement, which clearly shows that there was revised return and original return was filed on 23 rd August, 2018. He further submitted that as a foreign tax credit was denied to the assessee filed a rectification application under Section 154 of the Act against the above intimation on 21 st April, 2021, which has still not been considered. He further submitted that assessee has been denied relief under Section 90 of the Act, disallowance under Section 32 of the Act and also interest as well as late fee which is not in accordance with the law. 010. The learned Departmental Representative vehemently supported the order of the learned Assessing Officer and learned CIT (A). 011. We have carefully considered the rival contention and perused the orders of the lower authorities. Apparently in this case assessee is an individual, a resident in ordinary resident of India in the impugned assessment year as per the provisions of Section 6 (1) of the act. As assessee is a resident in ordinarily resident of India the global income of the assessee was chargeable to tax. Assessee is also a resident of the United Kingdom for calendar year 2017 – 18 as per the domestic tax laws of the United Kingdom. The assessee also earned salary in United Kingdom of ₹ 60, 77,630 on which he paid a tax of ₹ 1,866,501. According to article 24 (2) of the double taxation avoidance agreement, assessee claimed foreign tax credit in its original return of income which was filed before the due date of filing of the return. For the purpose of claiming Page | 7 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 foreign tax credit assessee also filed form number 67 in terms of rule 128 (9) of the income tax rules before filing of the original return of income. The assessee subsequently revised its return of income. Along with the revised return once again form number 67 was filed. This tax credit was denied by the centralised processing Centre, income tax department Bangalore by passing an intimation u/s 143 (1) of the income tax act 1961. In the intimation the due date for filing of original return was mentioned at 31 August 2018 and date of filing of return was mentioned as 07/2/2019. Assessee filed the appeal before the National faceless appeal Centre (NFAC), Delhi (the learned CIT (A)). The appellate order was passed on 20/9/2021 wherein the appeal of the assessee was treated as dismissed. The reason was that statement in form number 67 shall be furnished on or before the due date specified for furnishing the return of income. In the given case the appellant has filed the return of income on 7/2/2019 whereas the due date of filing of the return was 31/8/2019. It further held that the form number 67 is mandatorily required to be filed for claiming foreign tax credit was furnished on 7/2/2019 which is beyond the due date of furnishing of return of income and is not in accordance with the provisions of Rule128 of income tax rules 1962, the assessee is not entitled to foreign tax credit. The CIT appeal considered few judicial precedents also to dismiss the appeal of the assessee. We find that the assessee has filed original return of income which has been ignored by the Central processing centre, Bangalore as well as the National faceless appeal Centre. Even before Page | 8 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 the National faceless appeal Centre the assessee made a detailed written submission wherein in paragraph number 5 the complete facts are mentioned which is also been reproduced by the National faceless assessment centre but did not consider that assessee has also filed original return of income. Undisputedly along with the original return of income form number 67 was filed for claim of credit for foreign tax credit. This whole fact has been ignored by the Central processing centre as well as the learned CIT – A. As the assessee has filed original return of income before the due date of filing of the return and form number 67 was also filed prior to the due date of filing of the return, the learned AO Central processing centre as well as the learned CIT – A has grossly erred in holding that assessee has not filed return of income and form number 67 before the due date of filing of the return. These are on record but lower authorities have ignored it for the reasons best known to them. Further before the National faceless appeal Centre, the learned CIT (A) the assessee submitted the complete facts along with the statement and the acknowledgement number of original return filed, despite this, the learned CIT appeal dismissed the appeal of the assessee by noting wrong facts and giving wrong reasons. Therefore we reverse the orders of the lower authority and direct the learned assessing officer to grant credit of foreign tax credit to the assessee as form number 67 has been filed by the assessee on or before the due date prescribed for filing of the return of income. In the result ground number 1 – 2 of the appeal are allowed. Page | 9 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 012. With ground number 3 assessee has challenged the disallowance of depreciation of ₹ 1492 while processing the tax return. The depreciation of ₹ 1492/– was also disallowed for the reason that assessee mentioned it in serial number 12 (ii) of the schedule BP that relates to the computation of business profit but the depreciation is with respect to the assets of an undertaking engaged in generation and generation and distribution of the power. As the assessee is not in the business of power generation or distribution the depreciation was denied. The learned it CIT – A held that in a filing of the return of income the onus is on the assessee to correctly fill up the return of income and make appropriate claims in the correct return. If incorrect claims are made in the return of income there liable to be rejected. Accordingly the action of the learned assessing officer is upheld. We find that assessee has made an incorrect claim in the return of income by filling up the incorrect column, the Central processing centre found that assessee is not engaged in the business of power generation et cetera and therefore is not entitled to depreciation and therefore disallowed. We find that the learned CIT – A has given a correct reason that in e filing of the return it is the duty of the assessee to put the correct amount in the correct column. Thus ground number 3 of the appeal is dismissed. 013. Ground number 4 is with respect to the charging of interest u/s 234A of ₹ 24,648 and ground number 5 with respect to the charging of the interest u/s 234B and 234C, ground number six is with respect to imposing a fee of ₹ 5000 u/s 234F of the act. We find that assessee has filed Page | 10 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 his return of income in time and therefore the interest charged u/s 234A of ₹ 24,648 deserves to be deleted. Hence, we delete the same. Ground number 4 of the appeal is allowed. 014. Ground number 5 is with respect to the charging of interest u/s 234B and 234C of the act, which is consequential in nature, and therefore the learned assessing officer is directed to compute the same in accordance with the law. 015. Ground number 6 is with respect to charging of fees u/s 234F of the act of ₹ 5000. We find that as the assessee has filed his return of income within the due date prescribed for the impugned assessment year, the above fee is not leviable. Hence, we delete the same. 016. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 22.07.2022. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated:22.07.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, Page | 11 ITA No. 2100/Mum/2021 Prashant Vijay Kale, A.Y. 18-19 True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai