ROHIT VIJAY SINGH, Mumbai V. DCIT/ACIT, CPC, BANGALORE, Mumbai

ITA 2916/MUM/2022

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The case involves Rohit Vijay Singh, an employee of Tata Consultancy Services Limited, who filed an appeal against the order of the Commissioner of Income Tax (Appeals) regarding the denial of double taxation relief under sections 90 and 90A of the Income Tax Act, 1961. The primary issue was the non-filing of Form 67 along with the return of income, which was necessary for claiming foreign tax credit for taxes paid in Denmark. The Tribunal considered similar precedents and ruled that the delay in filing Form 67 should not preclude the assessee from claiming the foreign tax credit, directing the Assessing Officer to decide the matter on its merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123841 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 15-11-2022
• Other Referred Cases: Bhagwandas Tikamdas Khinani v. CIT, Sonakshi Sinha vs CIT, 42 Hertz Software India (P.) Ltd v. ACIT, Ms. Brinda Rama Krishna v. ITO, Vinodkumar Lakshmipathi V CIT(A), PCIT vs Wipro Ltd, Anuj Bhagwati vs DCIT
• Laws Referred To: Income-tax Act, 1961, DTAA with Denmark, I.T. Rules
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; TDS
• Section: 90; 154; 139; 143(1); 139(1); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND MS KAVITHA RAJAGOPAL, HON'BLE JUDICIAL MEMBER ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh 6/603, Dhanalaxmi Building B-Wing, Mitha Nagar M.G. Road, Goregaon (W) Mumbai - 400060 PAN: BALPS2871R v. DCIT/ACIT Centralized Processing Centre Bangalore Ward 17(1)(1) Mumbai Kautilya Bhavan Bandra Kurla Complex Bandra(E), Mumbai - 400050 (Appellant) (Respondent) Assessee Represented by : Shri Bhupendra Shah Department Represented by : Shri A.N. Bhalekar Date of Hearing : 23.01.2023 Date of Pronouncement : 17.04.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 21.09.2022 for the A.Y.2018-19. ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 2 2. Brief facts of the case are, assessee is an individual working for Tata Consultancy Services Limited and filed his original return of income on 31.12.2018 declaring income generated in India at ₹.16,26,678/- and income generated out of India (Denmark) equivalent to ₹.21,33,308/- alongwith declaration of TDS deducted in both these countries. Tax return was filed on 31.12.2019 being last date of filing. Form 67 was filed after rejection of claim of tax credit on foreign income. The case was selected for scrutiny and the return was processed u/s 143(1) of Income-tax Act, 1961 (in short “Act”) on 23.06.2020, disallowing claim u/s 90 & 90A of ₹.6,59,192/- and additional demand of ₹.8,87,375/- was raised. Assessee filed rectification application on 07.07.2020 and the above rectification order was disposed off without accepting the view of the assessee. 3. Aggrieved, with the above order assessee filed appeal before the Ld.CIT(A) and filed the detailed submissions before him. After considering the submissions of the assessee, Ld.CIT(A) observed that the issue raised by the assessee is regarding non filing of Form 67 and consequently it should be filed for claiming foreign credit by invoking Rule 128(9) of the I.T. Rules. Ld.CIT(A) by referring to the provisions of Income-tax Act and DTAA with Denmark and I.T. Rules analysed the facts on record and dismissed the grounds raised by the assessee. ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 3 4. Aggrieved assessee is in appeal before us, raising following grounds in its appeal: - “1. In the fact and circumstances of the case in law, the A.O CPC erred in denying the double taxation relief claimed u/s 90 and 90A of Rs 6,59,192/- to the Appellant who is employed overseas in Denmark with TCS. 2. In the fact and circumstances of the case in law, the A.O CPC erred in denying the credit of taxes withheld by the employer in Denmark thereby causing undue hardship and denying natural justice to the Appellant just for the reason of not filing form 67 before filing the return u/s 139. 3. In the fact and circumstances of the case in law, the A.O CPC erred in charging interest u/s 234 B & 234C of Rs 234718/- by disregarding the fact that the Appellant is a NRI eligible for relief u/s 90 and 90A 4. In facts and circumstances of the case in law the erred in rejecting application u/s 154 even though this is a mistake apparent from record. 5. In the facts and circumstances of the case and in law, the learned Commissioner of Income Tax(A) erred in confirming the same by rejecting written submissions and also overlooking the fact that debatable addition cannot be sustained u/s 154 or 143[1] [C] Relief Prayed: The appellant therefore prays Your Honour, 1. To grant credit of foreign tax credit of RS Rs. 6,59,192/- 2. To delete the interest of Rs234718/-u/s 234 3. To quash the debatable addition made u/s 143[1] and confirmed u/s 143[1] [D] General:- The appellant reserves rights to add alter or delete any portion of this appeal before its conclusion. This appeal is filed in time and may please be allowed in full. A Detailed paper book along with case laws will be submitted at the time of hearing.” ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 4 5. At the time of hearing, Ld. AR of the assessee submitted that the issue under consideration is covered and he brought to our notice the order of the ITAT in the case of Bhagwandas Tikamdas Khinani v. CIT in ITA.No. 2177/Mum/2012 dated 01.12.2022 and prayed that the Hon'ble ITAT has considered the similar issue and decided the issue in favour of the assessee. 6. On the other hand, Ld. DR relied on the orders of the lower authorities. 7. Considered the rival submissions and material placed on record, from the facts we observe that assessee has not filed the return of income along with Form No. 67 and not filing of Form No. 67 along with return of income as per the provisions of section 128(9) of I.T. Rules is the main issue under consideration. On the similar facts on record the Coordinate Bench has decided the issue in the case of Bhagwandas Tikamdas Khinani v. CIT (supra) and observed as under: - “7. We have considered the rival submissions and perused the material available on record. In the present case, the due date for filing the return of income as per provision of section 139(1) of the Act, in the case of the assessee, was 31/07/2020, which was subsequently extended to 10/01/2021. However, the assessee filed his return of income on 30/03/2021 declaring income earned from salary and income from other sources. It is the claim of the assessee that it has also earned salary, dividend, and interest income amounting to Rs. 17,08,080 in the USA on which tax was paid by the assessee in the USA. Accordingly, in order to claim the credit of ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 5 foreign tax paid as per the provisions of section 90 of the Act, the assessee also filed Form No. 67 along with the relevant certificate/statement. The ADIT, CPC, Bengaluru, while processing the return of income vide intimation issued under section 143(1) of the Act denied the foreign tax credit of Rs. 1,82,192, claimed by the assessee under section 90/90A of the Act. In the impugned order, it has been held that Form No. 67 was filed by the assessee after the due date of filing the return of income under section 139(1) of the Act, as per the provisions of Rule 128(9) and thus claim of the assessee was rejected. 8. We find that under Rule 128(9), as it stood during the year under consideration, provided that 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 sub-section (1) of section 139, in the manner specified for furnishing such return of income. Thus, during the year under consideration, the assessee was required to furnish Form No. 67 on or before the due date of filing the return of income under section 139(1) of the Act, as per the provisions of Rule 128(9). We further find that Rule 128(9) has recently been substituted by the Income- tax (Twenty-seventh Amendment) Rules, 2022, w.r.e.f. 01/04/2022 and the same reads as under: “(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 end of the assessment year relevant to the previous year in which the income referred to in sub- rule (1) has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the time specified under sub-section (1) or sub-section (4) of section 139:” 9. Thus with effect from 01/04/2022, the time period for furnishing statement in Form No. 67 has been extended till the end of the assessment year in which the corresponding income has been offered/assessed to tax and the return of such assessment year has been furnished within the time specified under 139(1) or 139(4) of the Act. 10 We find that the coordinate bench of the Tribunal in Sonakshi Sinha vs CIT, in ITA No. 1704/Mum./2022, vide order dated 08/09/2022, while dealing with a similar issue wherein the taxpayer filed Form No.67, after the due date for filing the return of income under section 139(1), observed as under: ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 6 “012. We have carefully considered the rival contention and perused the orders of the lower authorities. Short question In this appeal is whether assessee is entitled to foreign tax credit even when form number 67 required to be filed according to the provisions of rule 128 (9) of the Income Tax Rules on or before the due date of filing of the return of income, not complied by the assessee, but same was filed before the completion of the assessment proceedings. Precisely, the fact shows that assessee filed return of income u/s 139 (1) of the income tax act. In such a return of income, she claimed the foreign tax credit. However, form number 67 was filed during the course of assessment proceedings and not before the due date of filing return. Rule 128 (9) of the Income Tax Rules 1962 provides that 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 sub-section (1) of section 139, in the manner specified for furnishing such return of income. We find that coordinate bench in 42 Hertz Software India (P.) Ltd v. ACIT [2022] 139 taxmann.com 448 (Bangalore - Trib.) wherein following its earlier order in the case of Ms. Brinda Rama Krishna v.ITO [2022] 135 taxmann.com 358 (Bang Trib) it was held that "one of the requirements of Rule128 for claiming FTC is that Form 67 is to be submitted by assessee before filing of the returns and that this requirement cannot be treated as mandatory, rather it is directory in nature. This is because, Rule 128(9) does not provide for disallowance of FTC in case of delay in filing Form No. 67. Same view is also taken by a coordinate division bench in Vinodkumar Lakshmipathi V CIT(A) NFAC ITA No.680/Bang./2022 06.09.2022. It is well settled that while laying down a particular procedure, if no negative or adverse consequences are contemplated for non-adherence to such procedure, the relevant provision is normally not taken to be mandatory and is considered to be purely directory. Admittedly, Rule 128 does not prescribe denial of credit of FTC. Further the Act i.e. section 90 or 91 also do not prescribe timeline for filing of such declaration on or before due date of filing of ROI. Further rule 128 (4) clearly provides the condition where the foreign tax credit would not be allowed. Rule 128 (9) does not say that if prescribed form would not be filed on or before the due date of filing of the return no such credit would be allowed. Further by the amendment to the rule with effect from 1 April 2022, the assessee can ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 7 file such form number 67 on or before the end of the assessment year. Therefore, legislature in its own wisdom has extended such date which is beyond the due date of filing of the return of income. Further, the fact in the present case is quite distinct then the issue involved in the decision of the honourable Supreme Court in case of Wipro Ltd (supra). Here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, respectfully following the decisions of the coordinate bench on this issue, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground number 2 of the appeal of the assessee is allowed.” 11. We further find that the coordinate bench of the Tribunal, in the aforesaid decision, also considered the decision of Hon’ble Supreme Court in PCIT vs Wipro Ltd., [2022] 140 Taxmann.com 223 (SC), upon which reliance was placed by the learned DR during the hearing. 12. We find that in another decision in Anuj Bhagwati vs DCIT, in ITAs No.1844 and 1845/Mum./2022, the coordinate bench of the Tribunal vide order dated 20/09/2022, while deciding a similar issue held that section 90/91 of the Act has not been amended insofar as grant of foreign tax credit is concerned and Rules cannot override the Act and therefore filing of Form No. 67 is not mandatory but it is directory. The relevant findings of the coordinate bench of the Tribunal in the aforesaid decision are as under: “8. We considering the facts, circumstances provisions of the Act and judicial decisions are of the opinion that there is no amendment on these aspects in the Section 90 of the Act and the Rules cannot override the Act and therefore the filing of Form No 67 is not mandatory but it is directory. Accordingly, We restore the disputed issue to the file of the CIT(A) to adjudicate afresh on merits considering the observations in above paragraphs and the ratio of judicial decisions. Further the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 8 of appeal and allow the grounds of appeal of the assessee for statistical purposes.” 13. Thus, respectfully following the aforesaid decisions of the coordinate bench of the Tribunal, we are of the considered opinion that mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as they stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India. Since in the present case, the claim of the assessee was denied on this technical aspect without going into the merits, therefore, we deem it appropriate to direct the jurisdictional Assessing Officer to decide the claim of the foreign tax credit on merits, after accepting the Form No. 67 and other related documents filed by the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purposes.” 14. In the result, the appeal by the assessee is allowed for statistical purposes.” 8. Respectfully following the above said decision, we are inclined to remand this issue back to the file of the Assessing Officer to consider the claim of the assessee and allow the same as per law. Accordingly, appeal filed by the assessee is allowed for statistical purpose. 9. In the result, appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 17 th April, 2023 Sd/- Sd/- (KAVITHA RAJAGOPAL) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 17/04/2023 Giridhar, Sr.PS ITA NO. 2916/MUM/2022 (A.Y: 2018-19) Rohit Vijay Singh Page No. | 9 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum